 |
 |
02 Nov 2005
In fiscal 2005, nearly half of JDSU's revenue came from activities other than optical telecommunications. Jacqueline Hewett finds out about the firm's diversification plans.
Everyone in the telecoms arena from start-ups to multinationals found themselves in the same boat when the bubble burst: adapt to survive or go under. JDSU was no exception. Renowned for selling components and subsystems to optical network vendors, the firm is now equally at home supplying lasers for biomedical applications, specialist coatings for displays and anti-counterfeiting technology for currency.
It hasn't been an easy road for JDSU. However, now, thanks to consolidating manufacturing facilities, phasing out unprofitable product lines and acquiring key industry players (see box), fiscal 2005 is the first year since 2001 that JDSU has reported a rise in annual revenue.
It's clear that times have changed at JDSU. As well as diversifying into a range of new applications, much of the firm's optical communications business has been shifted to a low-cost manufacturing base in China. Some 60% of JDSU's communication products are now produced outside North America. Of a global workforce of around 5000, close to 2000 staff are employed in Shenzhen, China.
Enzo Signore, JDSU's vice-president of corporate marketing, says that these changes mean that the company can become profitable once again. "The major acquisitions and moves are made," he said. "We believe we have put the company in a strong position to grow organically in our three business segments."
The three business segments that Signore is referring to are JDSU's core optical communications segment, its newly formed communications test and measurement segment (via the acquisition of Acterna) and finally what it calls its consumer and commercial business.
To put things in perspective, in fiscal 2002, 73% of JDSU's revenue came from its optical communications business. Today, at the end of fiscal 2005, this percentage has dropped to 59%.
So what has changed? "We have analysed every single product that we have in the company and determined whether it is worth investing in further," explained Signore.
For example, one product line that failed to make the grade was passive Q-switched microlasers. JDSU sold this product line along with its Grenoble, France, facility to Teem Photonics in August this year allowing it to concentrate on its solid-state laser portfolio.
At the same time, JDSU is also looking at new business areas, which has led to the growth of its consumer and commercial segment. Today, the company is focusing its efforts around three areas: commercial lasers, FLEX products (optical variable pigments that change colour depending on viewing angle) and optics and displays.
As for commercial lasers, JDSU has for some time had a line of gas lasers, fibre lasers, laser diodes and continuous-wave diode-pumped solid-state (DPSS) sources. Then in March this year it expanded this by acquiring high-power DPSS laser specialist Lightwave Electronics.
For $65 m (€54 m) in cash, JDSU gained Lightwave's line of high-power Q-switched and modelocked DPSS lasers emitting at 1064, 532 and 355 nm. The acquisition also gives JDSU a route into lucrative markets such as biotechnology and semiconductor processing, each of which they believe has a compound annual growth rate of around 20%.
One application JDSU is keen to target is ultraviolet (UV) fluorescence flow cytometry using its newly acquired quasi-continuous-wave 355 nm source from Lightwave. It believes solid-state lasers like this source can displace incumbent technologies such as helium-cadmium and doubled argon-ion.
Another application on JDSU's hit-list is semiconductor processing and in particular singulation (scribing silicon wafers), drilling vias and memory repair. Again, Lightwave's lasers will be crucial in these applications.
"Even though the semiconductor processing market is cyclical, it is one where we see more opportunities on a long-term basis," said Signore. "The initial yield of DRAM memory is very small, some 5-10% for example. By using a laser, you can correct defects on the wafer and improve the yield to over 95% but this can only be done using UV."
Another important area for the new look JDSU is its colour-change FLEX pigments. These pigments change colour with viewing angle, for example from pink to green, and act as a security feature. "We are now supplying close to 100 countries with this technology for use on bank notes," said Signore. "It is on the euro and tells the consumer that the currency is genuine. It's a very secure feature."
JDSU believes another large market for this technology is protecting pharmaceutical brands against anti-counterfeiting by applying the pigments to the labels on medication bottles. The same approach can also be applied to consumables such as ink cartridges to prove they are genuine.
"Many pharmaceutical companies are now moving away from holograms [on bottles of medication] and are turning to colour shifting technologies," explained Signore. "Today 26 brands, mostly in North America, are using this technology to fight anti-counterfeiting. You are going to see this become more of a standard in pharmaceuticals and consumables."
The final part of JDSU's commercial and consumer segment is optics and displays, where the company supplies a range of coated optics and filters to a variety of end users. Applications range from solar cell cover glass for use on spacecraft and satellites to electro-optic modulators for the National Ignition Facility.
A recent addition to this part of JDSU's business is Photonic Power, which it acquired in June 2005. "Photonic Power is unique in that there is only one vendor in the world," said Signore. "Bringing electrical power over optical fibre is a small revenue for JDSU right now, but the potential applications are very broad."
Photonic Power's technology generates electricity by illuminating a photovoltaic converter with light transmitted over an optical fibre. The company says that its converters can generate hundreds of milliwatts of electrical power when illuminated with around 1 W of laser light. This offers an attractive alternative to batteries, fuel cells and bulky copper cabling in harsh environments, such as locations that are vulnerable to fire or electromagnetic interference.
It's not just JDSU's product lines that have been influenced by the reshaping and realigning. According to Signore the geography of its customers will also change.
"Historically, we have been very much a North American company with 60% plus of revenue coming from this region," he said. "We now have about 55% from North America and 30% coming from Europe. You can expect to see a lot more of JDSU in Europe in areas like commercial lasers. We plan to expand our sales presence and open up distribution channels in Europe."
On the back of the acquisition of Lightwave, it is also clear that JDSU is in a better position to take on traditionally strong European markets such as materials processing. "It's a typical European market and one that has opportunities so it is an area we are considering," said Signore. "We were at the LASER 2005 show in Munich and that was one of our first activities to reconnect with the European market. We also plan to be a lot more visible at Photonics West 2006."
With all the major moves made, it remains to be seen whether JDSU can blend all the pieces together and turn a profit. It posted a net loss of $261.3 m for fiscal 2005, but with a substantial number of new revenue streams gradually kicking in, JDSU's quarterly financial results will certainly make interesting reading throughout 2006.
 |  |  |  |  |  |  |
| © 2024 SPIE Europe |
|
