JDS Uniphase Corporation F3Q06 (Qtr ended Mar 31, 2006) Earnings Conference Call Transcript (JDSU)

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2006-05-03 16:15:35.0

Tags: JDS Uniphase, Call Transcript, Needham & Co., Earnings, Growth Rate, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Your first question is from John Harmon, Needham & Company.

John Harmon - Needham & Company

I was wondering what you were saying about your optical business, that most of the growth came from new products. Is there any way to think about how big the market for ROADMs and wavelength blockers might be, and how big it's growing?

Kevin Kennedy

There are other people that are estimating these things. I would say that traditionally, we have felt that the optical market was growing at 5% to 10% per year. I'd say based, upon what we've seen recently, it's at the high-end of that range, if not better. So, it is a favorable market.

We think things like ROADMs and wavelength switches are probably growing at the 40% or 50% per year growth rates, and those are numbers that people other than myself, analysts, developed. I think we have a piece of our portfolio that is in the lower end of the growth range, this 5% to 15%. We've got these high-end products that are probably in the 40% per year growth rates. Then we have products like tunables that are sub-$100 million markets -- and that of course is true of ROADMs-- but over the next two years they will become $100 million markets, and they are probably growing at 40% to 50% per year as well.

So, I think there a lot of beacons for growth out there, and we know what those are, the high-end products as well as the tunables. The traditional stuff is growing a bit slower. I should say that both metro and long-haul for us grew at double-digit growth rates quarter-over-quarter. So, there was good activity in both of those as well. I hope that helps.

John Harmon - Needham & Company

It does, thank you.

Operator

Our next question comes from Dayle Hogg, JMP Securities.

Dayle Hogg - JMP Securities

With the RoHS, do you see some excess inventory in the channel already, or do you see that as building in the next quarter?

Kevin Kennedy

I don't know that I see excess inventory in the channel. As you know, much of what we make for the top-tier customers are built to order. So, they're not the kinds of things that people would buy with the purpose of having inventory in general.

But our big concern is that people could decide to flip a switch at some point and require everything from some point forward to be RoHS-compliant. And that would mean us accelerating the future and possibly having things left over from the past. So, I don't know how to call that until we get further into it. We are fairly intimate with each of our customers and trying to manage that process one customer at a time.

 

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