How To Survive The Optical Networking Shakeout
Small-cap, macro, value, momentum
Summary
One way to escape the shakeout is demonstrated by Lumentum, which looks like having won Apple as a customer for a new big market opportunity, 3D Sensing.
The shares rallied on this likelihood, despite a disappointing third quarter and disturbingly soft fourth-quarter guidance.
Is most of the good news priced in?
The optical networking sector is in a funk because of a slowdown in Chinese demand, but even as Lumentum (NASDAQ:LITE) misses expectations and guides significantly lower, the stock still rallied strongly what's going on?
One word, Apple (NASDAQ:AAPL). There are apparently two ways to escape the optical networking shakeout. One is to win Apple as a customer, which is what seems to be happening to Lumentum. The other way is to have little exposure to Chinese demand, like Applied Optoelectronics (NASDAQ:AAOI), which also rallied strongly.
Article continued at link........
https://seekingalpha.com/article/4070359-survive-optical-networking-shakeout
