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OSI mulls future of fiber-optic unit

The company hires a financial adviser to explore "strategic alternatives" for its fiber-optic product subsidiary, OSI Fibercomm.

OSI Systems said Monday it is exploring "strategic alternatives" for its fiber-optic product subsidiary, OSI Fibercomm.

The Hawthorne, Calif., company said in a statement it hired Roth Capital Partners as a financial adviser to help OSI Fibercomm explore possible private-equity financing or other alternatives. The moves by the company, whose stock held steady at $3.92 by market close, could include a sale of the division.

The move is designed to "enhance shareholder value," according to Chief Executive Deepak Chopra.

The optical-communications industry has been a high-growth sector but has seen volatility during the past few years. Last week, JDS Uniphase issued a profit warning and Corning tumbled on a report by Merrill Lynch that flagged slowing sales.

OSI's optoelectronic devices comprise 58 percent of sales, and are used for a variety of communications, medical, aerospace and office products. The company's main clients include Lockheed Martin, Xerox and Motorola.

In its most recent third-quarter report, the company said sales for OSI Fibercomm were strong. The subsidiary's sales increased 369 percent, from $445,000 in the fiscal third quarter of last year, to $2.1 million in this year's third quarter.

OSI also gave projections for the subsidiary's fiscal-year results. Based on scheduled shipments, OSI Fibercomm expects to report sales of about $4.8 million for this fiscal year ending June 30, up from $1.4 million in sales a year ago.

Overall, First Call is expecting OSI Systems to report earnings of 6 cents a share for the fiscal year.

OSI had already declared a strategy to organize its growth businesses under three groupings--security products, medical products, and fiber-optic components and subsystems. It had already sold its Silicon Microstructures subsidiary, which makes mechanical sensing products, in 2001.