What the Apple press missed in Monday’s Lumentum story

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I missed it too. My readers did not.

 

Apple fell sharply Monday, taking with it the shares of a raft of tech companies—suppliers and competitors alike.

The trigger: One of its suppliers, Lumentum, had warned investors that a major client, quickly identified as Apple, had sharply cut orders for VCSELs, the vertical cavity surface emitting laser units that provide the 3D face recognition sensors in X-generation iPhones.

Apple fell on the assumption that bad news for Lumentum spelled bad news for iPhone unit sales.

The fact that Lumentum’s chief competitor, Finisar, was the happy beneficiary last year of a $390 million investment from Apple’s Advanced Manufacturing Fund was not mentioned in the Wells Fargo note I excerpted Monday morning. Nor was it mentioned in the accounts posted by Reuters, CNBC or any of the other stories Google turned up, including this morning’s Wall Street Journal ($).

It was one of my readers, not the Journal, CNBC or Reuters, who spotted a report of the ribbon cutting last summer for Finisar’s new VCSEL manufacturing facility in Sherman, Texas. (A factory soon to be owned by Pennsylvania-based II-VI—pronounced “two six”—another VCSEL supplier that scooped up Finisar only last Friday for $3.2 billion in cash and stock.)

As friend-of-the-blog Gregg Thurman wrote:

Apple helped finance this facility. Instead of beating down AAPL on Lumentum’s poor guidance, the market should be rewarding Apple/AAPL for securing VCSEL supply at (probably) industry best prices.

It’s quite possible Apple’s engineering team has VCSEL specs they want Finisar to manufacture to that others won’t have.

As Cook has said on several occasions, you can’t make Apple performance assumptions based on supply chain “intelligence”.

My take: What Gregg Thurman said.