Brighter Days for JDS Uniphase?

Investors bid the shares higher Friday as the company reported a sharply narrower loss

After struggling to make a profit for more than five years, JDS Uniphase (JDSUD), or JDSU, is getting closer to the green. The fiber-optic company's shares soared more than 15% on Nov. 3 after news that JDSU isn't losing as much money.

The Milpitas (Calif.) company said Nov. 2 that it had net loss of $17 million, or 8 cents per share, during the three months ended Sept. 30 (using Generally Accepted Accounting Principles). During the comparable quarter of 2005, JDSU had a net loss of $67.0 million, or 34 cents per share.

Non-GAAP income, which excludes one-time expenses, amounted to 3 cents per share of profit during the quarter compared to a loss of 8 cents per share in 2005.

"We see the environment for optical systems improving, as service operators look to expand their network bandwidth capabilities," said Ari Bensinger, an analyst at Standard & Poor's. (S&P, like, is owned by The McGraw-Hill Companies.) "We believe JDSU is starting to demonstrate consistent operational execution, particularly on the profitability front." He hiked his 12-month target price on the stock by $1 to $17.

Other market players liked the company better too. JDSU's stock was rising 15.1% to $16.44 per share in early afternoon trading on the Nasdaq.

Needham & Co. upgraded JDSU to strong buy from buy, noting factors such as JDSU's improving earnings. Analyst John Harmon hiked his earnings per share estimate for fiscal year 2007 (ending June) by 1 cent to 30 cents and his fiscal year 2008 estimate by 5 cents to 85 cents.

"Our strong balance sheet, coupled with a firm commitment to innovation, ensures that JDSU will continue to enable the delivery of next generation optical and broadband service technologies," said Kevin Kennedy, JDSU's chief executive officer, in a press release Nov. 2.

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