Santa Rosa division of fiber optics maker JDSU begins new era as Viavi Solutions
A pioneering Sonoma County business, whose breakthrough discoveries have shown up in spaceships, fiber optic networks and the currency we carry in our pockets, is poised to begin a new chapter in an era of tech company breakups.
The Santa Rosa division of JDS Uniphase, whose beginnings here go back six decades, this weekend was renamed Viavi Solutions. New signs, which were under wraps last week on Northpoint Parkway, mark the change as the parent company splits into two entities.
JDSU, a fiber optics component whose fortunes soared and fizzled at the start of the millennium, is dropping its name as part of the separation. Three of its divisions, including the Santa Rosa-based Optical Security and Performance unit, have been renamed Viavi. A fourth division has been split off and given the name Lumentum Holdings.
Former JDSU CEO Tom Waechter, the new CEO of Viavi, said the change will make it easier for the separated companies to seek out new opportunities, adapt their operations and become more profitable.
“We want to pick up the pace of our growth,” Waechter said.
For the Santa Rosa division, the split will mean becoming a bigger part of a smaller company. Under the past configuration, Waechter said, the local unit was “somewhat buried inside JDSU.”
“They’re going to get a lot more visibility, both internally and externally,” he said.
On Monday, the new companies will conduct their first day of business. Also that day, investors will receive one share of Lumentum stock for every five JDSU shares owned as of July 27.
The stockholders are expected to receive about 47 million shares of Lumentum, while Viavi will retain nearly 12 million more. JDSU stock will be converted into Viavi shares, which will begin normal trading Tuesday on the NASDAQ Stock Exchange.
The JDSU separation is reminiscent of other recent tech breakups, including last year’s split of Santa Rosa-based Keysight Technologies from Agilent Technologies. Often spurred by investor concerns, the breakups typically are portrayed as a way to make companies more nimble and focused, as well as to make them easier for investors to understand and value.
Dick Herman, president of 101 MFG, a Petaluma-based alliance of manufacturing executives, said taking risks is part of the fast-changing and “disruptive” tech industry. But JDSU has some basis on which to bet that the separated businesses can succeed in the years ahead by creating and marketing valuable products.
“They’re doubling down on their tremendous record of innovation,” Herman said.
The transition is expected to be relatively tame for the local division, especially compared to the heady days when it was first acquired.
Before it became part of JDSU, the business was Optical Coatings Laboratory Inc. OCLI, as it was known, opened its doors in Santa Rosa in the early 1950s as one of the county’s first tech companies.
Over the decades, the business created high-tech coatings for spacecraft windows; special mirrors for the Polaroid SX-70 instant camera; color-shifting pigments used on the currency of more than 100 nations to thwart counterfeiting; and a 1-millimeter-wide optical filter that allowed communication companies to vastly increase the amount of data that could be sent over a single fiber optic line.
It was largely for that last breakthrough that JDSU acquired OCLI in 2000 for $6.2 billion in stock, a purchase price that soared along with share value in the months between the deal’s announcement and its consummation. At the time, OCLI was the world’s largest producer of thin-film filters for fiber-optic networks.
The OCLI buyout remains the second largest in county history, behind only the 1999 purchase of Petaluma-based Cerent by Cisco Systems for $7.3 billion.
However, the expanded company’s fortunes soon changed. JDSU sales and stock value plummeted in the dot-com tech bust that began later that year. The stock, which sold for more than $1,000 a share in mid-2000 when adjusted for splits, could be had for less than $3 in the fall of 2008.
The stock price ended Friday at $11.09 a share.
As a new business, Viavi will be headquartered in Milpitas, with annual revenue of about $950 million, 3,200 employees and 45 offices worldwide. The Santa Rosa facilities employ about 430 workers and contribute about $200 million in annual revenue. Viavi’s products include software, instruments and systems for the development, operation and optimization of data and communication networks. Its 4,000 customers include AT&T, Amazon, Bank of America, Ford, Costco, Microsft and Cisco.
Lumentum, meanwhile, makes optical components for the telecommunications market, as well as commercial lasers. The company has 1,500 workers and also will be headquartered in Milpitas.
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