Brand-new JDSU spinoff Lumentum has been presumed to be an acquisition target for other companies in the optical components space, but don't be surprised if the hunted turns out to be the hunter.
Lumentum Holdings Inc. CEO Alan Lowe tells Light Reading the company may look to acquire other firms "to create additional scale or fill out gaps in our technology portfolio," and lists greater freedom to pursue "inorganic growth" as one of the benefits of being spun off from JDSU.
JDSU hinted when it announced its corporate split strategy almost a year ago that its Communications and Commercial Optical Products business, later renamed Lumentum, could accelerate its own growth as a buyer. However, several analysts have said almost since that announcement that Lumentum more likely could be a buyout target, with Finisar Corp. (Nasdaq: FNSR) mentioned as the most likely buyer. (See JDSU Spin-Offs Look M&A-Ready.)
Lowe acknowledges the industry chatter, but won't say whether it's inaccurate or not. "It's certainly something the analysts are talking about," he says, but adds, "I can't comment whether there is M&A activity going on."
If Lumentum does pursue acquisitions, it could focus its attention on component companies "further down the food chain" that it already counts as partners, Lowe says.
Lumentum recently provided its revenue outlook for its fiscal first quarter, but declined to report earnings for the previous fiscal fourth quarter. The company consists of the optical products groups supplying ROADMs and other gear to telecom and data communications customers, as well as a commercial lasers business and 3D sensing and industrial diode laser for gaming and telecom applications. (See Lumentum Sets Q4 Revenue Guidance and JDSU to Split in Two.)
— Dan O'Shea, Managing Editor, Light Reading