Buzz Picking up in late June, 07 Over JDSU Acquisition

Implications: 1.Is it possible that speculation in May, 07 that JDSU was shopping its optical component business was only part of the story? 2.The component/transceiver group clearly does not look that attractive. 3.Even with throwing the test systems operation into the mix, many industry observers still consider JDSU to be a dog.

Analysis: On the morning of June 28, Theflyonthewall.com published a rumor over “unconfirmed takeover chatter” concerning JDSU. Apparently, no further reports have been issued by other sources.

It is conceivable that the companies interested in JDSU are not that attracted to its struggling optical components unit. The supplier has lost its preferred status with Cisco Systems, and also has been set back with Tellabs. Of course, JDSU is still doing well with its ROADMs.

As the original article points out, even though further consolidation of the optical components space makes a lot of sense, “[n]one of its competitors seems big enough to take on such a purchase.” One would suspect that any interest on the part of other manufacturers or private equity companies would be more interested in the “Acterna” test systems group, which is doing well.

It would not be too surprising if a deal to pick up of JDSU were announced within weeks, if not days. Along with the speculation in the industry, the supplier has been reducing its costs as much as possible to make its balance sheet more attractive. It is certainly very likely that JDSU does not foresee a better time to exit.