JDSU to Split into Two Separate Companies

12 September 2014—In an unusual move, optical networking equipment giant JDSU (Milpitas, Calif., U.S.A.) announced on Wednesday that its board of directors has approved plans to separate the company into two publicly traded companies. The two new entities will consist of an optical components business, currently called JDSU’s Communications and Commercial Optical Products (CCOC), and a network and service enablement (NSE) business, which will combine the Network Enablement, Service Enablement and Optical Security and Performance Products (OSP) segments. The split is expected to occur in the third quarter of 2015. The announcement did not specify the names of the new companies, nor whether the JDSU name will continue.

The CCOP company will continue to focus on optical components and commercial lasers, a market expected to grow 11 percent annually. The unit’s previous president and JDSU’s executive vice president, Alan Lowe, will continue as head of that company. The NSE business, a segment that is expected to grow six to eight percent annually, will focus on networking equipment, software-defined networks, and services, including installation. Current JDSU president and chief executive officer Tom Waechter will remain as head of the NSE side. Included in the NSE company, JDSU’s Santa Rosa division will remain intact as headquarters of the company’s OSP division, which currently employs 415 people and produces thin-film and 3-D sensor products. 

JDSU, which has had roots as a major tech employer in the Silicon Valley area south of San Francisco for more than 60 years (before it was called Silicon Valley), is following Agilent Technologies (Santa Clara, Calif., U.S.A.) in a similar move announced last fall. Agilent’s Santa Rosa facility, which specializes in electronic measurement, will spin off as a new publicly traded company called Keysight Technologies in November.

Both Agilent and JDSU decided to cleave their diverse operations in response to recent increases in market complexity. The traditional telecom market has become entangled with datacom and mobile communications to include cloud networking, data center growth, and software-driven networks. The split will make it easier for analysts and investors to value the companies.

The separation is expected to occur through a tax-free pro-rate spinoff of CCOP to JDSU shareholders, depending upon various tax and regulatory factors.