JDS Uniphase F1Q07 (Qtr End 9/30/06) Earnings Call Transcript

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2006-11-02 19:18:11.0

Tags: Measurement, Sun Java Desktop System, JDS Uniphase, Call Transcript, Earnings, Citigroup Inc., Pause, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions). And gentlemen, your first question comes from the line Michael Genovese with Citigroup. Please proceed.

Michael Genovese - Citigroup

Hi, thanks a lot. Good quarter guys. So, when you talk about pause, both on the optical side and in the test and measurement side, help me understand how long -- especially, if we look at the guidance for testing and measurement, clearly there's a sequential increase -- a pretty nice sequential increase in test and measurement. Now is this -- are we still looking for the big customers to pause in the fourth quarter or -- I'm sorry -- the calendar fourth quarter, the fiscal second quarter? Or is that an ongoing problem in the second quarter, is that easing? Please help me understand that and then similarly on the optical communications side, the pause that you referenced, what is the timeframe of that pause that you are seeing going forward?

Kevin Kennedy

First, any guidance that we provide you, it tends to comprehend the impact of any one particular carrier or set of customers that might slow down. And we think we have baked it into our guidance for this quarter. I believe that for the next two or three quarters, we will see a lumpiness. Some large network equipment manufacturers will continue their buying. While if they acquired somebody, they might spend some time rationalizing the supply chain. On the carrier side, we're still awaiting certain approvals for some of the assets, and so we are seeing slowdowns in conversations. What actually happens is very dependent upon wherein the architecture you are. Test and measurement is a very turns business. If you have the right product when people need it and they have to budget, they buy it. There are other more architectural strategic products that may see less of a pause. So, I think the industry at large will be mindful of these pauses for the next three quarters. On the other hand, I am sending you a message that the overall climate is favorable. In this particular quarter, the Tier 2 customers and such were very strong. And so that is not where we are seeing any of the consolidation and the flow through of business was fine. I'm hoping that was helpful.

Michael Genovese - Citigroup

Well, let me just switch topics here and ask one more question. When you talk about the near-term, 2% to 5% operating margin guidance, is that explicit for the second quarter? I assume that is included in near term, and how many quarters are we going to be in that range before we can start to think about going higher than 5%?

 

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