JDSU has announced plans to separate its business into two separate, publicly traded companies: one that focuses on network and service enablement, optical security and performance; and a second that consists of JDSU’s commercial laser and optical products business.
Neither of the intended companies has names yet, and the transition isn’t expected to be complete until the third quarter of 2015. The transaction will take place through a tax-free spin-off process, JDSU said, with separate brand identities for each company.
Tom Waechter, president and CEO of JDSU, told RCR that over the last three to five years, JDSU has been building up each of its business segments so that they could stand alone if necessary. The separation was always an option that had been reviewed with the board from time to time, he said, and JDSU’s business units have not as fully integrated as they could have been with an eye toward agility.
“Now the businesses are large enough that they could be separated, and they’re in really good shape,” Waechter said. He said that in particular, JDSU’s last three to four acquisitions in the mobile space have put the network-software-focused company-to-be in a good position.
Waechter said that JDSU sees opportunity in the “tremendous upheaval” going on in networks as more devices are connected and the Internet of Things begins to happen, as well as architectural shifts with software-defined networking (SDN) and network function virtualization (NFV). He said that JDSU “has some really good traction” in the area of SDN and NFV that it has grown both organically and through acquisitions, and that it wants to continue its growth in that area.
“We think those are great opportunities for the company, but we think we can address the changes more efficiently if we’re separate entities,” Waechter said. “The businesses are ready for it, and the conditions are ripe in the industry.”
Waechter described the “spin-co” business as an $800 million operation that primarily focuses on commercial lasers and optical products — in other words, mostly hardware. The company’s current president, Alan Lowe, will serve as its CEO. The “remain-co” with about $950 million in revenues will consist of JDSU’s network and service abilities, plus security and performance offerings and will continue to be led by Waechter.
The JDSU split is only the most recent move to reshape companies in the test and measurement space. Agilent Technologies is well on its way to spinning off its electronic test and measurement business into Keysight Technologies, with final separation expected in early November. Meanwhile, Anite sold its travel business earlier this year to focus solely on testing and service assurance for the wireless industry.