Verizon Communications Inc. Proves Unions’ Claim Hollow
Lumentum Holdings Inc is a vendor for Verizon Communications Inc. for fiber optics. JPMorgan’s Rod Hall feels that the former should show higher revenue growth later this year on better optical datapoint momentum. ‘We expect the firm to gain traction in the web 2.0 vertical as well as 100G upgrade cycle continues. We expect Lasers business to improve in FY17 as the firm fixes execution issue with its key customer,’ Hall explained. He said that Lumentum’s new multi-million dollar QSFP28 deal with a new large web 2.0 customer in the datacom segment could further boost growth in FY17.
Meanwhile, the firm reported a ‘beat and raise quarter’ on strong demand from China where Lumentum expects ROADM deployments to accelerate in 2017. Lumentum’s revenue from HongKong grew 73 percent to $151 mn, while US revenue is expected to rebound in FY17 from Verizon’s 100G metro deployments as well as new Web 2.0 customer deployments.
In addition, Lumentum said that they don’t yet expect any impact from the Verizon strike, with deployments still expected in the second half of 2016. ‘We believe one way that Verizon could deal with an extended strike would be to begin deployment outside of the affected north-east corridor of the US,’ Hall noted.
Verizon and union leaders have met many times for bargaining over worker issues. But no major conclusions have come out. Also, the union has asked the FCC to investigate copper to fiber upgrades.