What if you bought JDS Uniphase in 2000?
US Tech · Networks. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0.0× · S&P 500 same money: $4,626
$1,000 in JDS Uniphase at the start of 2000 would be worth about $25.00 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
The story
JDS Uniphase was formed in 1999 by the merger of Canada's JDS Fitel and California's Uniphase, makers of the lasers, filters and other optical components that carried internet traffic over fibre. It was the purest bet on the idea that bandwidth demand would grow forever, and it used its soaring stock as currency for a string of acquisitions, most notably laser maker SDL in a deal worth tens of billions of dollars.
When telecom spending collapsed in 2001, JDSU wrote down the value of those acquisitions and reported an annual loss of more than 50 billion dollars, then among the largest ever recorded. On a split-adjusted basis the shares fell by more than 99 percent. Internet traffic did grow enormously, as predicted, but the fibre laid during the boom took years to fill and component prices collapsed. In 2015 the company split in two, spinning off its optical components business as Lumentum, while the remaining shares continued as Viavi Solutions, a network testing firm.
The lesson: Acquisitions paid for with inflated stock destroy value when the bubble deflates; JDSU's write-downs were the bill for buying companies with temporary currency.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2000 | $400 | $25.00 | $4,626 | 0.0× |
| 2003 | $3.00 | $3,333 | $7,727 | 3.3× |
| 2005 | $2.50 | $4,000 | $5,763 | 4.0× |
| 2007 | $15.00 | $667 | $4,789 | 0.7× |
| 2008 | $13.00 | $769 | $4,626 | 0.8× |
| 2010 | $8.00 | $1,250 | $6,071 | 1.2× |
| 2012 | $12.00 | $833 | $5,312 | 0.8× |
| 2015 | $14.00 | $714 | $3,301 | 0.7× |
| 2018 | $10.00 | $1,000 | $2,519 | 1.0× |
| 2020 | $15.00 | $667 | $2,092 | 0.7× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 2005, turning $1,000 into $4,000. The S&P 500 from that same year: $5,763.
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. JDS Uniphase is one of 258 positions on the wheel — including the ones that went to zero.
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