NEW YORK (CNNfn) - Shares of JDS Uniphase fell nearly 11 percent in morning trade Friday on the heels of the company's revelation of a massive annual net loss, and executives of the world's largest supplier of fiber-optic components gave a downbeat outlook for the business in the near term.|
After the close of trading Thursday, the Ottawa-based firm said its net loss for the fiscal year ended June 30 was $50.6 billion, which industry observers are calling the largest annual loss ever posted by a company in North American corporate history.
For its fiscal fourth quarter, JDS Uniphase's net loss was $7.9 billion. Excluding a slew of extraordinary items, the company logged a second-quarter operating profit of 2 cents per share, which is a penny less than analysts had expected, according to a survey conducted by earnings tracker First Call.
Executives of JDS Uniphase said they see no signs of a reversal in the downward trend in demand for their products and expect fiscal first-quarter revenue to be below their earlier estimate of $450 million.
Exactly how much, they would not say. Executives did not provide specific financial targets for the fiscal first-quarter or the fiscal year.
As have most of its peers in the telecom-equipment market, JDS Uniphase has been stung by a sharp slowdown in capital spending by telecommunications service providers in the face of a slowing and uncertain economy.
JDS Uniphase is the No. 1 supplier of components used to transmit light waves across fiber-optic networks. Its customers include telecom equipment makers such as Alcatel, Lucent, and Nortel.
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Earlier this month, Nortel, the top supplier of fiber-optic networking equipment, logged a $19.4 billion net loss for its second quarter. Its executives did not provide financial guidance for the months ahead, either.
Several analysts chimed in on JDS Uniphase Friday. They are forecasting revenue in the current quarter ranging from $310 million to $360 million. W.R. Hambrecht downgraded its investment rating on the company's shares to "buy" from "strong buy." Banc of America Securities took its rating on the stock down to "market perform" from "buy."
Executives of JDS Uniphase said the company would break even in the current quarter if revenue was above $350 million, once restructuring efforts take full effect sometime during the period.
In conjunction with its earnings report Thursday, JDS Uniphase announced that it will cut another 7,000 jobs on top of those already planned. In all the company said it plans to have fired 16,000 employees by the end of the current quarter.
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Much of the company's annual losses, about $38.7 billion, can be attributed to reductions in the value of slew of acquisitions it has made. The company has been on an acquisition tear, growing from a company with $40 million in sales five years ago when it was a small Canadian firm called JDS Fitel, to a fiber-optics powerhouse with $3.2 billion in revenue for the fiscal year ended June 2001.
JDS Uniphase executives defended the company's acquisition spree Friday.
"Had we not done what we did, and told customers when there was a boon that I didn't want to do it because I didn't want to fire 5,000 people, some little guy would have got the business," Jozef Straus, the company's CEO, told Reuters.
He said the acquisitions have bolstered the company's ability to generate revenue and puts it in a much better position when the market turns up.
"Its staggering that you could grow the company 80 percent with six months in a downturn," Straus said. "So, clearly, when the business is there, we are positioned to get going."