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JDS Uniphase Corp (NASDAQ:JDSU) Segregation Plan Likely To Attract Potential Suitors For Acquisition

Boston, MA 09/12/2014 (wallstreetpr) – After JDS Uniphase Corp (NASDAQ:JDSU) recently announced about its plan of segregating the entire business into two components, it received almost undisputed support at The Wall Street. The company declared that it planned to divide the company into two diverse publically-traded companies.

The Business Segregation Plan

JDS Uniphase Corp (NASDAQ:JDSU) believes that one company would focus on commercial- laser and optical component, while the other publically traded company shall direct its focus on network service business.

The plan is said to be a result of Sandell Asset Management poking, and the prodding has worked well for the activist firm.

Two Businesses on One Platform: Not Compatible

At present, nevertheless, the industry experts believe that two businesses which JDS Uniphase Corp (NASDAQ:JDSU) has planned for separation are not quite compatible, given that they will reside under a common umbrella.

If revenue for the fiscal year that ended on June 28, 2014, is seen; then optical component business surged 7%, but its gross margin remained stuck at 33% with approximately 61% at network service component, which showed a gradual growth.

Investors Optimistic               

In the entire scenario, investors are pushing the stock of company on positive aspects and hope for betterment. Yesterday, the valuation of company’s stock was pushed 22% more than the average of 5 years. This is also hinting towards the fact that there might be chances of acquisition for one of the two components or arms that JDS Uniphase Corp (NASDAQ:JDSU) will be divided to.

It seems that the interested parties may target network service business because of the increase in the demand of latest networking technologies. The primary attraction for prospective buyers would be $2.3 billion net operating loss of the company that appears as carry-forwards. But here is a catch! This company isolation might take at least one year for final settlement and this is a long time for potential suitors to wait.

Published by Nicholas Maithya

Nicholas is a Financial Analyst by profession, who enjoys writing about investments, technological developments, business, economics and other financial topics at various financial publications. Join him here on as he endeavors to deliver to you the latest breaking news on the above mentioned fronts. Contact him by email at [email protected] or follow Nicholas Kitonyi @nmaithyak on Twitter.

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