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No. of Recommendations: 0
Ok, This post serves 2 purposes:
1) celebrate my first post to this board.
2) Trying to get a sneak peek of next week's RM Article on ranking JDSU).


Financial AnalysiCompany Being Evaluated Competitor #1 Competitor #2 Competitor #3

JDS Uniphase Corp. E - Tek Dynamics Nortel SDL Inc.
(JDSU) (ETEK) (NT) (SDLI)
Current Period Year-ago PeriodYear-over-Year Current Period Current Period Current Period
Sept 30/99 Sept 30/98 Growth Sept 30/99 Sept 30/99 Sept 30/99
Income Statement . . .
Sales 230.10 57.40 3.01 60.34 5393.00 47.51
Cost of Goods S 125.20 28.90 3.33 30.18 3099.00 26.66
Net Income (113.90) 8.10 N/A 6.68 8.00 7.38
Shares Outstand 168.50 84.50 0.99

Balance Sheet . . .
Cash & Equivale 495.60 75.40 5.57 178.72 1213.00 206.06
Current Assets 1,218.70 463.60 1.63 268.93 11673.00 368.99
Short-term Debt 0.00 0.00 No Debt 6.98 351.00 0.00
Current Liabili 148.80 148.80 0.00 69.74 7019.00 30.26
Long-term Debt 0.00 0.00 No Debt 17.64 1470.00 4.25
1.00 1.00 1.00Competitors
Margins & Ratios . . .
Gross Margins 0.46 0.50 (4.06) 0.50 0.43 0.44 45.5%
Net Margins (0.50) 0.14 (63.61) 0.11 0.00 0.16 8.9%
Cash-to-Debt No Debt! No Debt! No Debt! 7.26 0.67 48.48 0.86
Net Cash 495.60 75.40 5.57 154.09 -608.00 201.81 -84.0
Fool Flow Ratio 4.86 2.61 0.86 1.44 1.57 5.38 2.80


Continue Here


Ranking Rule Makers

1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 0 Sales Growth 3
Openness 1 Gross Margins 0
Optimism 1 Net Margins 0
Legitimacy 1 Shares Outstandin 0
Inevitability 0 Cash-to-Debt 3
Solitariness 1 Fool Flow Ratio 0
Humor 1 Expansion Potenti 3
Subtotal 5 Subtotal 9


2) Financial Loca Points (0-2) 4) Monopoly Status Points (0-4)
Mass Market Habit 1 Gross Margins 2
Gross Margins 1 Net Margins 0
Net Margins 0 Net Cash 4
Cash-to-Debt 2 Fool Flow Ratio 0
Fool Flow Ratio 0 Convenience 4
Your Interest 1 Subtotal 10
Subtotal 5
5) Your Enjoyment 1

Total Score 30 Third Tier

Summary- (score/total)
Brand: 5/7
Financial Location: 5/12
Financial Direction: 9/21
Monopoly Status: 10/20

JDSU loses points in the following areas:
1) Net Margins - The merger with JDS Fitel in Jan/99,
and subsequent acquisitions (see http://www.jdsunph.com/html/corpinfo/faqs.cfm )
led to these one time charges which brought down the
net income.
As the growth of JDSU matures, I expect them to report
+ve earnings again.

2) Flowie - JDSU scored a 4.86!!!! Current Assets far
bigger than cash on hand. JDSU is getting lots of
cash, but it's not able to retain the cash because of
its current growth stage (lots more mergers &
acquisitions to come this year!)

3) Financial Direction - The acquisitions and expansion
(JDSU is acquiring more real estate to build up its
manufacturing plants) make year over year comparisons
difficult.

4) Monopoly Status - Still not considered a monopoly
(at least not according to this RM Ranker!)



Comments and Feedback welcome.


Thx.
Cheers,
Albert
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No. of Recommendations: 7
Well, after surfing thru the JDSU board, TMF Grape pointed out that :
1) Short-term investments are included in cash when
calculating the flow ratio.
2) For calculating net margins (from net income), you
should eliminate the acquisition related charges and
the amortization.
His post in the JDSU board regarding these 2 issues can
be found here:
http://boards.fool.com/Message.asp?id=1150100001053008&sort=postdate

So, I have restated my results by accounting for the
above 2 changes.

Financial AnalysiCompany Being Evaluated Competitor #1 Competitor #2 Competitor #3

JDS Uniphase Corp. E- Tek Dynamics Nortel SDL Inc.
(JDSU) (ETEK) (NT) (SDLI)
Current Period Year-ago PeriodYear-over-Year Current Period Current Period Current Period
Sept 30/99 Sept 30/98 Growth Sept 30/99 Sept 30/99 Sept 30/99
Income Statement . . .
Sales 230.10 57.40 3.01 60.34 5393.00 47.51
Cost of Goods S 125.20 28.90 3.33 30.18 3099.00 26.66
Net Income 59.00 8.10 6.28 13.31 150.00 7.59
Shares Outstand 168.50 84.50 0.99

Balance Sheet . . .
Cash & Equivale 959.20 75.40 11.72 178.72 1213.00 292.35
Current Assets 1,218.70 463.60 1.63 268.93 11673.00 368.99
Short-term Debt 0.00 0.00 No Debt 6.98 351.00 0.00
Current Liabili 148.80 148.80 0.00 69.74 7019.00 30.26
Long-term Debt 0.00 0.00 No Debt 17.64 1470.00 4.25
1.00 1.00 1.00Competitors
Margins & Ratios . . .
Gross Margins 0.46 0.50 (4.06) 0.50 0.43 0.44 45.5%
Net Margins 0.26 0.14 11.53 0.22 0.03 0.16 13.6%
Cash-to-Debt No Debt! No Debt! No Debt! 7.26 0.67 68.79 0.91
Net Cash 959.20 75.40 11.72 154.09 -608.00 288.10 -55.3
Fool Flow Ratio 1.74 2.61 (0.33) 1.44 1.57 2.53 1.85


Continue Here


Ranking Rule Makers

1) Brand Points (0-1) 3) Financial Dire Points (0-3)
Familiarity 0 Sales Growth 3
Openness 1 Gross Margins 0
Optimism 1 Net Margins 3
Legitimacy 1 Shares Outstandin 0
Inevitability 0 Cash-to-Debt 3
Solitariness 1 Fool Flow Ratio 3
Humor 1 Expansion Potenti 3
Subtotal 5 Subtotal 15


2) Financial Location Points (0-2) 4) Monopoly Status Points (0-4)
Mass Market Habit 1 Gross Margins 2
Gross Margins 1 Net Margins 4
Net Margins 2 Net Cash 4
Cash-to-Debt 2 Fool Flow Ratio 2
Fool Flow Ratio 0 Convenience 4
Your Interest 1 Subtotal 16
Subtotal 7
5) Your Enjoyment 1

Total Score 44 Second Tier

Wow! What a difference these 2 simple changes make!
JDSU has a stash of short term investments (almost as
much as its stash of cash), and also by taking out the
acquisition related charges helped to bump up the net
income into positive territory.

I think that JDSU should definitely be chosen as the next addition to the Rule Maker Port!


Thx.
Cheers,
Albert
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No. of Recommendations: 0
Phileo,

good analysis.!!

You did miss one thing. They should get another 2-3 points for shares outstanding. You forgot to account for the split last year which is why the shares outstanding doubled. This may be a flaw with teh RM spreadsheet but you can work around it by adjusting for the split in the year prior numbers I suspect. So, now the score is more like 46 (or so).

To add some analysis they lose most points on the flow ratio, of those points available. This occurs because despite low current assets, current liabilities (and no debt, good!) are even lower. They need to work on, effectively, delaying payment. They appear to collect quickly (low A/R) but also pay out quickly. As they become more dominant in their industry areas they should be able to "work" their suppliers etc more to get better payment terms and improve that flow ratio. That would be enough to get them over the 50 point barrier from todays location as shown in your analysis.

Just fyi, great job.. cheers,

jgc
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No. of Recommendations: 0
GeoffChase in #5097:
"You forgot to account for the split last year which is why the shares outstanding doubled."

You're right. Silly me, I was just blindly plugging in the numbers! It's good to have a community of eyeballs to scrutinize my results to see if their legit.

I suspect that if you use ORTL (which TMF will in next week's rulemaker article) instead of NT (as I have), you may wind up with a smaller number for JDSU, since ORTL has less debt, and more (net) cash than NT.

Another factor which will affect JDSU's RM Ranking is looking at how to account for the merger w/ OCLI.

Here are OCLI's numbers:

Income Statement . . .
Sales 89.86
Cost of Goods Sold 63.19
Net Income 6.95
Shares Outstanding 15.32

Balance Sheet . . .
Cash & Equivalents 120.02
Current Assets 190.32
Short-term Debt 4.79
Current Liabilities 36.19
Long-term Debt 54.94

Margins & Ratios . . .
Gross Margins 29.7%
Net Margins 7.7%
Cash-to-Debt 2.01
Net Cash 60.3
Fool Flow Ratio 2.24


Should these numbers be simply added to JDSU's equivalent entries, or is there more to it than that?



Thx.
Cheers,
Albert
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No. of Recommendations: 0
Should these numbers be simply added to JDSU's equivalent entries, or is there more to it than that?

There's typically more than that. There are savings or costs associated with having a supplier in house now and different costs get shifted about a bit. However, a direct add is not a bad approximation as a first cut.

IMO, you leave OCLI out all together as the "truth" will come out when you see their first couple of quarters together. Those results will also, in comparison to direct addition, shed some insight into how well the companies have managed to merge operations, management etc...

cheers,

jgc



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Phileo,
Great work !!!
Just about NET INCOME calculation on your analysis ....
in order to get final NET INCOME of 59.00 you added
INTEREST AND OTHER INCOME = 5,5 and subtract, as last step, the INCOME TAX EXPENSE = 6,3
But I think that this is not fully correct because
INCOME TAX EXPENSE should be added (not subract !)
in order to get a final NET INCOME = 71,6
In fact, it may be easier and more accurate to use
OPERATING INCOME that is, as reported = 71,7
Any suggestion will be very appreciate.

Regards,
RICK64


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Here are OCLI's numbers...

Should these numbers be simply added to JDSU's equivalent entries, or is there more to it than that?


There's more to it than that. I believe that the two companies did business together before, so when you consolidate them, the intercompany activity is eliminated. Since we don't know the full extent of that activity, we really just have to wait until the companies are combined in the financial statements.

As far as competitors go, I've thought of using NT, LU and or GLW, but the problem is that all of those companies have aspects of their businesses that are different than that of JDSU, since I can't separate out the competing parts (which I believe are also larger portions of their business), I'm still leaning towards going with the companies that have the most similar overall businesses.

Phil



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Great work !!!
When going through the numbers myself, I came up with a couple of questions:
The Income Statement in the 11/04/99 10Q shows the periods ending 09/99 and 09/98. However the Balance Sheet shows periods ending 09/30/99 and 06/30/99. Don't we need to go back to 09/98 for the balance sheet data to be consistent ?

Also, it seems that cash and ST investments were added for the 09/99 column but not for the prior year.

I grabbed the 11/13/98 10Q and ran the numbers and noticed that the Flowie went up from 1.73 to 1.74.

Did I do something wrong ?

TIA,
bill
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txrangerfan in #5131:
"Don't we need to go back to 09/98 for the balance sheet data to be consistent ?"

Yes.
The only problem is that JDSU's fiscal year end is June 30/99. That's when the merger officially took place; JDS Fitel and UNPH no longer existed after that date, and was replaced by JDSU.

I searched both the freeEDGAR.com website and JDSU's website for any information on Sep/98 balance sheet for JDSU. All I could find were 2 Jun/98 balance sheets that didn't agree with each other

From searching through all those financial statements, I am getting the distinct impression that for JDSU, life started after Jun 30/99. Many financial statements, and certainly the balance sheet is oriented towards using Jun 30/99 as the starting date for their year to year comparisons.

I think that the best comparison for now is to use the Jun/99 annual report.


Thx.
Cheers,
Albert
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