Mar. 29, 2015, 7:39 PM
- Optical component industry consolidation "was a common topic of discussion among investors and companies" at the industry's recent OFC conference, reports Piper's Troy Jensen. "The reasons for consolidation are well known and center on operational expense savings, a more rational pricing environment, and more complete product lines."
- One deal that's viewed as especially likely: A Finisar (NASDAQ:FNSR) purchase of JDS Uniphase's (NASDAQ:JDSU) optical component/laser unit (CCOP), currently set to be spun off as Lumentum Holdings in Q3. Activist Sandell Asset Management has been urging JDS to sell CCOP, which had FY14 (ended June '14) revenue of $794M (+7% Y/Y). Jefferies' James Kisner thinks a deal could happen, but not before the spinoff occurs.
- Jensen on industry consolidation in general: "The question isn't really an if, but more of the urgency of potential sellers and buyers and also at what price a deal would take place. In general, our feeling is that investors were slightly more anxious for a deal, while companies we spoke with sensed the need for consolidation, but were less anxious."
- The industry has already seen a decent amount of M&A. In addition to CCOP, smaller component vendors Oclaro (OCLR - $213M market cap), Alliance Fiber (AFOP - $308M market cap), Applied Optoelectronics (AAOI - $196M market cap), and NeoPhotonics (NPTN - $217M market cap) could be targeted. NeoPhotonics has soared since delivering a big Q4 beat (fueled by strong 100G component demand) on March 3.
Nov. 20, 2014, 1:38 PM
- Optical networking hardware vendors and their component suppliers are turning in a good day. The gains come a day after component vendor Oplink announced it's being acquired by Koch Industries for $445M, and will be managed by connector maker Molex (a Koch subsidiary).
- RBC thinks Koch's entrance into the slumping component industry could trigger further consolidation. "Current fab utilization rates remain low ... with optical component vendors unable to charge a premium for their innovation. Gross margins are currently weighed by competitive pressures with optical component makers willing to cut pricing to account for high fixed costs."
- The firm believes Finisar (FNSR +1%) could be a buyer, and JDS Uniphase (JDSU +1.5%) and Oclaro (OCLR +7.1%) sellers. JDS, set to spin off its component unit, is facing activist pressure to put the business on sale.
- Meanwhile, Ciena (CIEN +2.8%) announced this morning it's partnering with Avaya to offer an enterprise solution that pairs its optical networking and integrated optical/Ethernet gear with Avaya's Ethernet switches. Like peers, Ciena is trying to lower its dependence on pressured carrier capex budgets.
- Other gainers: AFOP +3.7%. NPTN +3.3%. ADTN +2.7%. INFN +1.9%.
Nov. 17, 2014, 6:04 PM
- After management rejected its call to do so, activist Sandell Asset management has issued an open letter outlining its case for why JDS Uniphase (NASDAQ:JDSU) should put its optical component/commercial laser unit (CCOP, set to be spun off) on the block.
- Sandell also calls for shareholders not to re-elect CEO Thomas Waechter and governance committee chair Martin Kaplan to the board at JDS' annual meeting.
- Sandell: "It is our belief that there are several potential buyers who would be interested in an outright acquisition of the CCOP business, and we believe that a sale could be consummated far sooner than the 3rd quarter of 2015, which is the date of the proposed CCOP spin-off."
- The firm adds JDS "has federal, state, and foreign tax net operating loss carryforwards (NOLs) of approximately $6.1 billion, $1.8 billion, and $1.0 billion, respectively." It argues a CCOP sale acts as the most effective way to monetize the NOLs.
- JDS: "The JDSU Board believes that pursuing an auction process for the sale of any business segment, as Sandell proposes, would be harmful to the business and not serve to maximize shareholder value."
- Bloomberg reported in October Sandell was pushing for a CCOP sale.
Jan. 30, 2014, 5:21 PM
- JDS Uniphase (JDSU) expects FQ3 revenue of $420M-$440M vs. a consensus of $425.9M.
- JDS also announces it's acquiring the assets of Trendium, a developer of analytics and customer experience optimization software for mobile carriers, and Time-Bandwidth Products, a maker of high-power lasers for industrial/scientific markets. Terms are undisclosed.
- Look for JDS to cross-sell Trendium's products to carrier test equipment customers. Carrier interest in advanced mobile analytics solutions has been growing in tandem with the mobile data/app boom. IBM made an acquisition in this space three months ago.
- JDS' FQ2 beat was driven in part by a gross margin of 48.5%, +220 bps Q/Q and +50 bps Y/Y. Optical communications product sales (39% of revenue) rose 12.1% Y/Y, and commercial optical sales (44% of revenue) 6.6%.
Dec. 11, 2013, 9:24 AM
- JDS Uniphase (JDSU) is acquiring Network Instruments, a provider of network analysis/performance monitoring hardware for enterprises and data centers, for $200M in cash. The deal is expected to close within 45 days. (PR)
- Network Instruments competes with Riverbed's (RVBD) Opnet unit and NetScout (NTCT), among others; the deal could rekindle M&A hopes for the latter. Network Instruments had revenue of $40M over the last 12 months, and (per JDS) addresses $1B+ worth of markets growing at a 13% clip.
- JDS asserts Network Instruments' products complement its carrier-focused network analysis/monitoring products, and will help it create new offerings as "enterprise and carrier network performance management requirements converge."
- JDSU +0.7% premarket
Apr. 11, 2013, 9:43 AM
In addition to announcing it's acquiring CyOptics, Avago (AVGO -0.3%) is creating a 20M-share buyback authorization (good for repurchasing 8% of shares) to replace a 15M-share authorization that just expired. CyOptics, which had 2012 sales of $210M and relies on an advanced material known as indium phosphide, lowers Avago's dependence on its wireless chip business (over half of sales), and makes the company a tougher optical component rival to JDS Uniphase (JDSU) and Finisar (FNSR). Avago asserts CyOptics' products strengthen its hand in the 40G/100G space, an area Cisco and Intel are also interested in.| Apr. 11, 2013, 9:43 AM
Aug. 14, 2012, 9:09 AM
JDS Uniphase (JDSU) is buying GenComm, a Korean maker of wireless infrastructure testing gear, for ann undisclosed sum. JDS, which already has a distribution deal with GenComm that produced $7.5M in FY12 revenue, has been trying to lower its exposure to a weak optical component market by growing its telecom testing business, leading it to compete more with vendors such as Agilent (A) and Ixia (XXIA).| Aug. 14, 2012, 9:09 AM
Mar. 27, 2012, 9:34 AM
Up initially following its all-stock acquisition of Opnext (OPXT +47.8%), Oclaro (OCLR -7.1%) is now lower. Concerns about the deal's premium, and perhaps the potential for share loss as customers strive to keep a diverse stable of suppliers, could be having an impact. That, in turn, has brought Opnext shares down to $1.67, well below the $1.96 price implied by yesterday's close. Rivals are trading higher: FNSR +3.4%. JDSU +2.2%. NPTN +1.1%.| Mar. 27, 2012, 9:34 AM
Mar. 26, 2012, 4:32 PM
Oclaro (OCLR) is acquiring rival optical component vendor Opnext (OPXT) in an all-stock deal that values Opnext at $1.96/share, or $177M, based on today's close. Oclaro will be issuing 0.42 shares of its stock for every Opnext share outstanding. Many have speculated the optical component market is ripe for consolidation. OCLR +2.2% AH. OPXT halted. FNSR +0.9%. NPTN and JDSU could also see volatility.| Mar. 26, 2012, 4:32 PM
Mar. 7, 2012, 4:00 PM
Saddled with too many vendors and excess capcity, the optical component industry is due for consolidation, says industry analyst Subu Subrahmanyan, who also speculates Oclaro (OCLR) could merge with Finisar (FNSR) or JDS Uniphase (JDSU). Finisar CEO Jerry Rawls says deals are often discussed, but disagreements over price and fears of post-merger market share losses are standing in the way.| Mar. 7, 2012, 4:00 PM