Thursday, August 21, 2008

Credit Cards Manufacturer Slowdown

In a concrete sign of slower issuance of credit cards: JDSU, who manufacturers the optical films for credit cards blamed its bad quarter in part on reduced orders for coatings.

Tech Trader Daily - Barron’s Online : An Indicator Of Consumer Credit Slump:
"It’s not often a fiber optic company tells you a lot in a direct way about the health of consumer spending. However, I had a fascinating discussion last night with Kevin Kennedy, the CEO of JDSU (JDSU), the $2.4 billion (market cap) maker of lasers and other components used in communications equipment. Part of the company’s business, the “Advanced Optical Division,” consists of coatings used on credit cards. That business, which is 13% of sales, was down about 6% in its fiscal Q4, the company last night reported, contributing to the company missing sales and profit estimates.

Kennedy noted that one of the three largest credit card issuers, a customer of JDSU’s, substantially reduced its issuance of new cards in the June quarter. JDSU has material share in the market for card coatings, so with card delinquencies and charge-offs on the rise, this is yet another meaningful indicator that credit card companies are pulling in their horns, lending less. Just one of the surprising economic tidbits you find from a tech company."

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