Lumentum Shares Plunge After Guidance Cut, Bruising Apple Stock In The Process

Apple Inc. AAPL shares were down more than 4 percent Monday after key iPhone supplier Lumentum Holdings Inc LITE, slashed its guidance.

The damage to Lumentum's stock was much worse, with shares hitting a new 52-week low of $37.59 and trading down about 30 percent at the time of publication. 

What Happened

Lumentum, which manufactures 3-D chips that help power the iPhone's facial recognition system, revised its fiscal second quarter outlook due to "a request from one of our largest industrial and consumer customers" — likely a reference to Apple.

Lumentum said it was told to "materially reduce shipments" of laser diodes for 3-D sensing to the unnamed customer.

The manufacturer lowered its fiscal second-quarter revenue outlook from a range of $405-$430 million to a new range of $335-$355 million. The company also lowered its non-GAAP operating margin from a range of 28-30 percent to 23-25 percent and the net income per share range from $1.60-$1.75 to $1.15-$1.34 per share.

Why It's Important

Lumentum's revision could be seen as a sign that Apple cut its orders by as much as 30 percent, Bloomberg quoted Wells Fargo analyst Aaron Rakers as saying in a research report.

Loop Capital Markets analyst James Kisner was also quoted by Bloomberg as saying Lumentum's guidance is "not entirely surprising," as the market for 3-D sensing technologies is likely to be smaller than previously expected.

What's Next

Lumentum's management team will be speaking at upcoming investor conferences, including:

• The UBS Global Technology Conference on Monday.
• The Needham Networking, Communications & Security Conference at 9:20 a.m. Tuesday, Nov. 13.

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Photo courtesy of Apple.