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Juniper’s Aurrion Buyout: Tech Nightmare?

August, 2016

Juniper Networks probably had very good reasons for becoming more vertically integrated in the optical space including perhaps the need to internally control its supply of transceivers as well as maybe strengthen its competitive position by acquiring intellectual property. Yet, its purchase of Aurrion and its complex set of moving parts at what seems to be a rather handsome price for the componentry company’s investors appears even more questionable than the router firm's previous pickup of BTI Systems. Aurrion’s focus is on wafer integration, the same type of technology that Intel has struggled to commercialize in the past. Although once again, following the industry in moving away from the original vision of silicon photonics, in our opinion, this particular adoption of a hybrid platform is truly challenging in placing tiny layers of Indium Phosphide onto the Si wafer. Putting aside th ...

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Lumentum Overtaken by Finisar at Apple?

July, 2017

When it comes to 3D-sensors, both Lumentum Holdings and Finisar are being gutsy in striving to make a tremendous amount of penetration, not only away from their traditional market strongholds, but also in a new product space, VCSEL dies, (arguably even a somewhat brand, new experience for Lumentum), which has technology challenges not meant for the fainthearted. Those individuals following our other blog have been able to keep up with some of the potential minefields in being a chip vendor to Apple’s iPhone including 1) only a minimum of two vendors needed for Apple to lower prices to shockingly low levels (and other smartphone competitors will expect their charges to be in the same ballpark); 2) the effects of iPhone pricing strategy itself; and 3) the increasing willingness for Apple to bring chip production in-house, and even leasing manufacturing equipment out, if a particular vendor ...

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Lumentum: The Street’s Latest Sacred Cow

November, 2017

There was Infinera with the unflinching belief of the cost benefits of PICs (which in our opinion, was never proven), and being oblivious to a traditional long-haul player forcing Transmode to take a backseat in its metro program. Then there was Acacia Communications, although a highly proficient technology company, and the beneficiary of the positioning of its IPO during a perfect storm, the valuation for just a DSP player became absurd. Later it was Applied Optoelectronics, which pretty much had the 40G market to itself for intra-data centers transceivers along with a very low-cost operation, while there was inadequate appreciation for both the low-entry barriers at 100G as well as the other drawbacks of being in the hyperscale space. Now Lumentum Holdings remains the latest darling on the Street based solely on apparently being the market leader in 3D-sensing, while not questioning th ...

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Finisar: New Chip-Centric Frame of Mind

January, 2018

While Finisar’s selection of its new CEO, Michael Hurlston, pretty much an outsider from the optical realm (the only exception may be an executive position with Exar much earlier in his career) is not without some risk, fibeReality believes it was a shrewd and audacious choice. While focused on the wireless communications side of the business, he gained a tremendous amount of experience in the same spaces served by optics, including being intimately involved with data centers, service providers, and enterprises – not to mention familiarity with China. Hurlston is also well-known in the investment community. He is in a position to evaluate Finisar’s position in a fresh and objective way, and can potentially find new paths to higher margins, with even possibly the company getting acquired down the road, by demonstrating it does not have to rely solely on those few-and-far-between market ab ...

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Lumentum: Benefit of the Doubt

February, 2018

During the summer of 2017, to the best of our knowledge, there were major technical problems at Apple with Lumentum’s six-inch VCSEL wafers (including with the epis supplied to the component vendor). Startlingly, after a short period of time, Lumentum Holdings apparently produced them in high volume with good yields. Despite the firm’s remarks to the contrary, pulling off this extraordinary feat without full control of the development/manufacturing process within the company itself made it that much greater an achievement. Even more astounding, the vendor did not milk this monumental accomplishment for all it was worth on its last quarterly earnings call, especially after Finisar made it clear that it was pretty much a novice in addressing the challenge beyond four-inch VCSEL wafers. Actually, the size of these devices was not brought up during that conference call at Lumentum, and there ...

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