Lumentum, NeoPhotonics: Nothing to see here on ZTE

Optical component and subsystems vendors continued to react to the news that the U.S. Department of Commerce has slapped export restrictions on Chinese communications systems vendor ZTE (see "ZTE faces export sanctions from US Department of Commerce"). In the wake of a significant downturn across the board in the stock prices of publicly traded optical technology suppliers, particularly after Oclaro revealed that ZTE will represent more than 10% of revenues in Oclaro's third fiscal quarter (see "Optical component suppliers brace for ZTE export ban effects"), Lumentum (NASDAQ:LITE) and NeoPhotonics attempted to distance themselves from the conflagration by announcing that they aren't in the same boat as Oclaro.

Optical component and subsystems vendors continued to react to the news that the U.S. Department of Commerce has slapped export restrictions on Chinese communications systems vendor ZTE (see "ZTE faces export sanctions from US Department of Commerce"). In the wake of a significant downturn across the board in the stock prices of publicly traded optical technology suppliers, particularly after Oclaro revealed that ZTE will represent more than 10% of revenues in Oclaro's third fiscal quarter (see "Optical component suppliers brace for ZTE export ban effects"), Lumentum (NASDAQ:LITE) and NeoPhotonics attempted to distance themselves from the conflagration by announcing that they aren't in the same boat as Oclaro.

Lumentum was the first to act, releasing a statement March 8 (in which they referred to themselves in the third person). "Lumentum noted that the Company's sales to ZTE were less than one percent of the Company's total sales during the first half of fiscal 2016 and recent business levels have not been material," the statement read.

NeoPhotonics followed with a statement of their own the next day. "NeoPhotonics revenue to ZTE during fiscal year 2015 were [sic] approximately one percent of total revenue, and the company does not anticipate materially different revenue from ZTE in the first quarter of 2016 or in the 2016 fiscal year," said the company. "This event has caused no change to the outlook for the quarter ending March 31, 2016 provided in the company's quarterly financial results press release of March 1, 2016."

Stocks in the sector rebounded somewhat on Wednesday after traders' initial negative reaction on Tuesday – except for Oclaro's which saw an additional loss of 1%, according to Seeking Alpha.

Other optical component and subsystem companies have not publicized statements on their involvement with ZTE. Simon Leopold, communications equipment analyst and managing director at Raymond James, expressed his belief in a note issued March 8 that companies such as Finisar likely has limited exposure to ZTE, while Applied Optoelectronics does not sell to ZTE at all.

One company to watch in this context is CoAdna. The developer of wavelength-selective switch (WSS) technology has its corporate headquarters in California, but strong ties to Taiwan that include an office under the name CoAdna Holdings Inc. The company does supply WSS technology to ZTE, says a source familiar with its operations.

For more information on optical subsystems and suppliers, visit the Lightwave Buyer's Guide.

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