Lumentum Holdings (LITE), a maker of fiber-optic components, pre-announced weak March quarter results tied to an order cancellation analysts believe involved Ciena (CIEN). LITE stock plunged while CIEN stock fell on the news.
For the March quarter, Lumentum lowered its revenue outlook for LITE stock by $63 million.
Lumentum also indicated that they’ll have another weak quarter in their June quarter.
“Late in our fiscal 2023 third quarter, a network equipment manufacturer who represented more than 10 percent of our fiscal Q2 revenue informed us that due to their inventory management, they would not take the shipments we had originally projected for the quarter,” said the Lumentum release.
LITE Stock: Industry Consolidator
On the stock market today, Lumentum plunged 13.1% to 44.56. CIEN stock fell 5.7% to 48.88.
Hannover, Md.-based Ciena’s gear is built into telecom networks and internet data centers.
At Jefferies, analyst George Notter said in a report: “As we look at the situation, Ciena could be reducing inventory for a number of reasons. LITE’s component lead times are coming down. Or, they simply over-bought from Lumentum relative to their business outlook.”
In addition, he said Ciena could be experiencing “additional supply chain problems with other ‘golden screw’ components.”
CIEN Stock: Relative Strength Rating
Lumentum has been a consolidator in the fiber-optic components industry. It acquired NeoPhotonics and Oclaro.
As of the market open on Thursday, LITE stock owns a Relative Strength Rating of 16. The Relative Strength Rating of CIEN stock stands at 79, according to IBD Stock Check-up.
Also, Lumentum sells Apple (AAPL) 3D sensors built into iPhones.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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