Revenue, Gross Margin and Net Income at Five Year Highs

Milpitas, California, January 31, 2007 – JDSU today reported results for its fiscal 2007 second quarter ended December 31, 2006. 

Net revenue for the second quarter was $366.3 million and GAAP net income was $23.2 million, or $0.10 per diluted share.   This compares to net revenue of $318.1 million and GAAP net loss of $(17.4) million, or $(0.08) per share, reported for the first quarter of fiscal 2007, and to net revenue of $312.9 million and a GAAP net loss of $(42.1) million, or $(0.20) per share, for the second quarter of fiscal 2006. 

On a non-GAAP basis, revenue for the second quarter was $366.4 million and non-GAAP net income was $30.0 million, or $0.13 per diluted share.   This compares to non-GAAP net revenue of $318.2 million and a non-GAAP net income of $6.8 million, or $0.03 per share, for the first quarter of fiscal 2007, and to non-GAAP net revenue of $315.0 million and a non-GAAP net loss of $(3.5) million, or $(0.02) per share, for the second quarter of fiscal 2006. 

On a non-GAAP EBITDA basis (non-GAAP Earnings Before Interest, Taxes, Depreciation and Amortization), the Company earned $33.9 million for the quarter ended December 31, 2006, which compares to $9.6 million for the first quarter of fiscal 2007, and to $8.1 million for the second quarter of fiscal 2006.

“During the second quarter, JDSU delivered the strongest revenue, gross margin, and net income results in more than five years,” said Kevin Kennedy, JDSU’s Chief Executive Officer.   “Positive earnings per share results show marked improvement from previous quarters, highlighting the impact of our strategy to diversify our business and return to profitability, while continuing to deliver highly innovative products to market.”

Financial Overview – Fiscal 2007 Second Quarter Ended December 31, 2006

• Communications Test and Measurement net revenue of $168.2 million was up 44% from last quarter, and up 15% from the same quarter a year ago.   This segment represented 46% of total revenue.
• Optical Communications net revenue of $132.7 million was down 4% from last quarter, and up 21% from the same quarter a year ago, representing 36% of total net revenue. 
• Advanced Optical Technologies net revenue of $40.4 million was up 3% from last quarter, and down 2% from the same quarter a year ago.   This segment represented 11% of total net revenue. 
• Reported under the heading of ‘All Other,’ the Commercial Lasers business reported revenue of $25.1 million, up 4% sequentially and up 39% from the same quarter a year ago, representing 7% of total net revenue.  
• Americas’ customers represented 57% of net revenue. European and Asia-Pacific customers represented 27% and 16% of net revenue, respectively.
• GAAP gross margin was 37.4% of net revenue, and non-GAAP gross margin was 40.6% of net revenue.
• GAAP operating expenses were $152.6 million, or 41.7% of net revenue.   Non-GAAP operating expenses were $129.4 million, or 35.3% of net revenue.
• The Company held $1,227.7 million in cash, cash equivalents, short-term investments and restricted cash at the end of the second quarter. 

Business Outlook

Coming off a seasonally strong second quarter, the Company expects net revenue for the third quarter of fiscal 2007, ending March 31, 2007, to be in the range of $333 to $353 million.

Conference Call

The Company will discuss these results and other related matters at 2:00 p.m. Pacific Time on January 31, 2007 in a live webcast, which will also be archived for replay on the Company's website at www.jdsu.com/investors.  This press release is being furnished as a Current Report on Form 8-K with the Securities and Exchange Commission, and will be available at http://www.sec.gov/.

About JDSU

JDSU (NASDAQ: JDSU; and TSX: JDU) is committed to enabling broadband & optical innovation in the communications, commercial and consumer markets.   JDSU is a leading provider of communications test and measurement solutions and optical products for telecommunications service providers, cable operators, and network equipment manufacturers.  Furthermore, JDSU is a leading provider of innovative optical solutions for medical/environmental instrumentation, semiconductor processing, display, brand authentication, aerospace and defense, and decorative applications.  More information is available at http://www.jdsu.com/.

Forward-Looking Statements

This press release contains, and the discussions in our subsequent conference call will contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include: (i) any anticipation or guidance as to future financial performance, including future revenue, gross margin, operating expense, operating margin, EBITDA and other financial metrics; and (ii) the Company's beliefs regarding the purpose, usefulness and efficacy of non-GAAP results and the measures and items the Company includes in the same, as well as any benefits to investors the Company believes its non-GAAP measures provide.   These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected.    In particular, the Company's ability to predict future financial performance continues to be difficult due to, among other things:  (a) continuing general limited visibility across many of our product lines; (b) the ongoing potential for significant quarter-over-quarter product mix fluctuations, which can materially impact profitability measures due to the broad gross margin range across our portfolio; (c) continuing consolidation affecting our customer base, which, in the shorter term limits demand visibility, and, in the longer term, could reduce our business potential; (d) average selling prices continue to decline across our traditional Optical Communications and our Advanced Optical Technologies and Commercial Lasers businesses; (e) we and many of our Optical Communications suppliers continue to experience execution and delivery challenges which limit our revenue and impair our profitability; (f) our Communications Test and Measurement business is notable for seasonality and a significant level of in-quarter book-and-ship business that can be particularly back-end loaded in the third fiscal quarter, further limiting our forecasting abilities; (g) we are currently engaged in various product and manufacturing transfers, site consolidations and product discontinuances; and (h) Optical Communications customer supply chain and inventory rationalization initiatives could further limit our demand visibility.

For more information on these and other risks affecting the Company's business, please refer to the “Risk Factors” section included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 filed with the Securities and Exchange Commission, as well as in other filings on Forms 10-Q and 10-K. The forward-looking statements contained in this news release are made as of the date hereof and the Company does not assume any obligation to update the reasons why actual results could differ materially from those projected in the forward-looking statements.

Contact Information

Investors:   Jacquie Ross, 408-546-4445 or investor.relations@jdsu.com
Press:   Kathleen Greene, 408-546-5852 or mailto:jayme.curtis@jdsu.com

The following financial tables are presented in accordance with GAAP, unless otherwise specified.

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