Optical equipment maker JDS Uniphase has enjoyed some strong market gains over the past week and the driver has apparently been rumours of an impending takeover offer from French telecom giant Alcatel SA.
However, both companies have refused to comment on the rumours and many analysts consider such a merger a lame-brained idea, to put it politely.
Late last week, JDS enjoyed a sharp rally, thanks in part to a bullish forecast from Juniper Networks that buoyed the entire sector.
On Friday, JDS hit a new 52-week high, up 16.4 per cent on the day to $6.75 on the Toronto Stock Exchange. On Monday, with U.S. markets closed, the stock spiked again, up 28 per cent in Toronto to $8.65.
The stock began the New Year at a mere $4.90.
By Tuesday afternoon, much of that exuberance had abated. Shortly after 1 p.m. EST, profit taking had pushed the stock down about 15 per cent in Toronto, or $1.30, to $7.35.
Much of the stock's recent spike has apparently been driven by rumours of a takeover offer from Alcatel. However, on Tuesday, both companies declined to comment on those rumours.
Most market watchers have put little weight on the rumours, saying such a move by Alcatel makes little sense considering that it sold off its optical equipment business last year.
In May 2003, Alcatel sold off the last of its money-losing optical component operations to California's Avanex.
The decline of Alcatel's so-called "optronics" business hit the Ottawa region hard two years ago. In July 2000, Alcatel Optronics acquired Gatineau firm Innovative Fibers Inc. for $260 million. The plant, which once employed 220, has since been shut down.
Meanwhile, JDS continues to trim staff and cut its sales expectations after three years of hardship, a reality that does little to make it an attractive purchase.
It Ottawa, the workforce has been whittled down to around 550 from a peak of 10,000. With the retirement of founder and chief executive Jozef Straus last fall, Ottawa has even lost the distinction of sharing the company's HQ with San Jose.
JDS reports results for its fiscal second quarter on Jan. 28. The company has forecast revenues of US$140 million to $150 million with a loss of two to three cents a share.
In last year's Q2, revenues were higher, at US$157 million.
