06 Apr 2023
Due to reduced demand Q3, 2023, revenue now set to be $380-$384M from previous forecast of $430-$460M.Lumentum has this week announced selected unaudited preliminary financial results for its third quarter (Q3), which ended April 1, 2023. Due to reduced demand, Q3 revenue was promptly revised downward to be $380-$384 million from the previous forecast of $430-$460 million (in February, 2023).
“Late in our fiscal 2023 third quarter, a network equipment manufacturer who represented more than 10 percent of our fiscal second quarter revenue informed us that due to their inventory management, they would not take the shipments we had originally projected for the quarter,” explained Alan Lowe, Lumentum President and CEO.
“This shortfall is the primary reason that our fiscal 2023 third quarter revenue will be below the low end of our prior guidance range. Looking ahead, we expect a similar level of shipments to this customer in our fiscal Q4, as we saw in Q3. Nevertheless, our customer relationship remains strong, and we continue to work together closely to help them achieve success.”
Share repurchase continues
Lowe continued, “We have confidence in our long-term strategy and operating model, and today we are announcing an increase in our share repurchase program.”
“Lumentum’s board of directors recently approved an increase in our share repurchase program authorization to an aggregate amount of $1.2 billion and extended its duration through May 2025.
“The company’s previously announced authorization was $1 billion through May 2024. As of April 1, 2023, Lumentum had used $615.5 million to repurchase 7.4 million shares. Lumentum expects to fund the repurchases under the extended share repurchase program out of its existing cash balance,” he said.
The company statement noted that this week’s Q3 results announcement “are preliminary based on information available to management as of the date of this release, and are subject to further change upon completion of standard quarter-end closing procedures”. Lumentum will release its Q3 2023 financial results on May 9th, 2023, before the market opens.
Following the announcement, Wednesday, the share price of Lumentum Holdings dropped sharply, falling 9% in trading after hours. Lumentum added that it did not expect this merely to be a timing issue, because it sees continued weakness in sales to this particular customer in the current fiscal fourth quarter.
Analyst Motley Fool commented, “To try to cushion the blow, Lumentum highlighted the recent increase in its stock buyback authorization and said that it had already used $615 million of the $1.2 billion available to repurchase 7.4 million shares.
“That expression of confidence is a reasonable attempt to ease tension among shareholders. But some will want to wait until Lumentum's full release of quarterly figures on May 9 before drawing any long-term conclusions about the company's prospects for business success,” stated the analyst.