JDS Uniphase's Time Has Come ... Again

By Eric Jackson
RealMoney Contributor
2/14/2011 5:06 PM EST
Click here for more stories by Eric Jackson

Unless you've been out of it for the last month, you know that JDS Uniphase (JDSU - commentary - Trade Now) has been on a tear. Year to date, the stock is up 95%.

A week and a half ago, the company released its latest earnings reports, and all hell has broken loose. The stock jumped from a close of $17.93 pre-earnings to near $22 when it opened. On Friday, it closed at $28.16.

For the bubble-heads who can't stop complaining about the valuations being afforded to Facebook, Twitter and Zynga, this rally by JDS Uniphase is yet another sign that another dot-com bubble is upon us.

Back in 1999, there was perhaps no greater bubble stock than JDS Uniphase. Remember the need for fiber-optic cables that was cited back then? Stocks like Qwest Communications (Q -commentary - Trade Now) and Global Crossing(GLBC - commentary - Trade Now) jumped like mad, and they were laying cable on the floor of the oceans like it was fish food. Do you remember 360networks? This Vancouver startup was in the same business and managed to recruit Greg Maffei -- who was CFO at Microsoft (MSFT - commentary - Trade Now) at the time -- to be the CEO. The venture failed in a glut of overcapacity in the space, and Maffei is now John Malone's heir apparent at Liberty Media (LCAPA - commentary - Trade Now).

Amid the hubbub, JDS Uniphase was selling optical cable networking gear to all these companies. If you recall, the wizard behind the magical uptrend in the shares was a tiny Canadian guy with a funny-looking beard and an even funnier-looking hat. The guy's name was Jozef Straus. And he helped to build the company into a colossus. At its peak in 2000, JDS Uniphase had a market capitalization of $250 billion. The stock, even after its huge recent run, is still more than 97% below that level.

It might have seemed like an odd company to take over the world of tech, but it was simply in the right place at the right time, and it rode the wave like nobody's business. It was selling a lot of testing gear at the time (and it still does) to help telecom companies tweak and upgrade their networks, in addition to selling the actual gear. Telcos were also booming, along with the gear providers like Alcatel-Lucent (ALU -commentary - Trade Now), which was two companies at the time. (Had there not been a fiber glut, the world would probably never have had to endure Carly Fiorina as the Hewlett-Packard (HPQ - commentary - Trade Now) CEO.)

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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Microsoft: What Wall Street Is Overlooking, Part 1

By Eric Jackson10/13/10 - 11:30 AM EDT

NEW YORK (TheStreet ) -- Microsoft(MSFT_) continues to be a much maligned stock on Wall Street, even though it's quietly become a large holding by many hedge funds over the past few months, including John Burbank's Passport Capital and Lee Ainsle's Maverick Capital. Both mentioned the stock in their Value Investing Conference talk in New York recently.

In an interview with TheStreet, Bill Koefoed, Microsoft GM of Investor Relations, talks about what he believes investors are missing in their analysis of the company. Here's Part 1 of the interview.

Eric Jackson: Most people following the company get the Windows 7 and Office upgrade cycle going on. But do you still think they're missing part of that story?

Bill Koefoed: There is a lot of strength across our businesses, including Windows and Office, and that's where people tend to gravitate in terms of the story. We have eight main business focus areas that drive our future, but I think as people think about Microsoft, sometimes they think there are just a couple of focus areas, Windows and Office. We have been investing in eight focus areas.

The first is really Xbox and TV. We feel great about the future of the Xbox business as this year we are going to have just a phenomenal game lineup. We have 25 million members on Xbox LIVE, which has been growing pretty substantially.

In addition to the subscription component of Xbox LIVE, we also have the ability to offer transactional items, whether it's a relationship with Netflix(NFLX_) that you could buy, things like map packs or other accessories and communications and collaboration items.

Xbox LIVE is very exciting and we feel it has an industry-leading capability. You will continue to see us develop that capability as we add Kinect and we can extend the Xbox console to more of a casual gamer or even people that want to use the Xbox for entertainment purposes. And we think there are a lot of great applications for that as we go forward.

The next area is Windows Phone. We launched Windows Phone 7 recently and the reviews have been exciting. We are committed to this market and see Windows Phone 7 as a way to bring the entire breadth of Microsoft assets to a mobile experience.

The next area is Bing. We continue to see phenomenal opportunities around the search business. It continues to be one that we think has very attractive economics. It tends to be one that has a margin profile that we really like and one that tends to be a software problem to solve. We feel like we've got the best software team on the planet. So we're very enthusiastic about Bing and continue to be.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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