Lumentum Holdings Inc. is an industry-leading provider of optical and photonic
products defined by revenue and market share addressing a range of end market
applications including Optical Communications and Commercial Lasers for manufacturing,
inspection and life-science applications. We seek to use our core optical and
photonic technology and our volume manufacturing capability to expand into attractive
emerging markets that benefit from advantages that optical or photonics-based
solutions provide, including 3D sensing for consumer electronics and diode light
sources for a variety of consumer and industrial applications. The majority
of our customers tend to be original equipment manufacturers (“OEMs”)
that incorporate our products into their products which then address end-market
applications. For example, we sell fiber optic components that our network equipment
manufacturer (“NEM”) customers assemble into communications networking
systems, which they sell to network service providers or enterprises with their
own networks. Similarly, many of our customers for our Lasers products incorporate
our products into tools they produce, which are used for manufacturing processes
by their customers. For 3D sensing, we sell diode lasers to manufacturers of
consumer electronics products for mobile, personal computing, and gaming who
then integrate our devices within their products, for eventual resale to consumers
and also into other industrial applications.
We operate in two reportable segments: Optical Communications (“OpComms”)
and Commercial Lasers (“Lasers”).
We have a global marketing and sales footprint that enables us to address global
market opportunities for our products. We have manufacturing capabilities and
facilities in North America, Asia-Pacific, and Europe, with employees engaged
in R&D, administration, manufacturing, support and sales and marketing activities.
Our headquarters are located in Milpitas, California, and we employed approximately
2,930 full-time employees around the world as of June 30, 2018.
Lumentum was incorporated in Delaware as a wholly owned subsidiary of JDS Uniphase
Corporation (“JDSU”) on February 10, 2015, and is comprised of the
former communications and commercial optical products (“CCOP”) segment
and WaveReady product lines of JDSU. In August 2015, we became an independent
publicly-traded company through the distribution by JDSU to its stockholders
of 80.1% of our outstanding common stock (the “Separation”). Each
JDSU stockholder of record as of the close of business on July 27, 2015, received
one share of Lumentum common stock for every five shares of JDSU common stock
held on such date. JDSU was renamed Viavi Solutions Inc. (“Viavi”)
and at the time of distribution, retained ownership of 19.9% of Lumentum’s
outstanding shares. Since the Separation, Viavi has sold a significant portion
of its shares and is no longer a significant shareholder of Lumentum.
Our business traces its origins to Uniphase Corporation, which was formed in
1979, and became publicly traded in 1992. Uniphase was originally a supplier
of commercial lasers, and later, a leading supplier of optical transmission
products. In 1999, JDS Fitel Inc., a pioneer in products for fiber optic networking
which was formed in 1981, merged with Uniphase to become JDSU, a global leader
in optical networking. Subsequent acquisitions by JDSU broadened the depth and
breadth of the OpComms and Lasers businesses, as well as the intellectual property,
technology and product offerings, of what is now Lumentum. Notable amongst these
acquisitions in the OpComms business were Agility Communications, Inc. in 2005
and Picolight, Inc. in 2007 which respectively brought widely tunable, long
wavelength laser technology for metro and long haul networking applications
and short wavelength vertical-cavity surface-emitting lasers (“VCSELs”)
for enterprise, datacenter networking, and 3D sensing applications. The fundamental
laser component technologies which we acquired through these acquisitions, form
the basis of virtually all optical networks today and we believe will continue
to do so for the foreseeable future. These technologies will enable us to develop
highly integrated products to satisfy our communications customers’ ever
increasing needs for smaller, lower power and lower cost optical products. Notable
acquisitions in the Lasers business were Lightwave Electronics Corporation in
2005 and Time-Bandwidth Products Inc. (“Time-Bandwidth”) in 2014.
Both of these Lasers acquisitions brought high power pulsed solid-state laser
products and technology to our business, which address the micro laser machining
market and expanded our addressable market.
The OpComms markets we serve are experiencing continually increasing needs
for higher data transmission speeds, fiber optic network capacity and network
agility. This is driven by rapid growth in both the number of higher bandwidth
broadband connections, notably those associated with mobile devices, such as
high-definition video, online gaming, cloud computing and the number and scale
of datacenters that require fiber optic links to enable the higher speeds and
increased scale necessary to deliver high bandwidth video and other services.
Our technology, which was originally developed for communications applications
is also finding use in other emerging market opportunities including 3D sensing
applications that employ our laser technology in mobile devices, computers,
augmented and virtual reality and other consumer electronics devices. Additionally,
our products are used in emerging automotive, industrial, security, safety and
surveillance applications.
In the Lasers markets, customer demand is driven by the need to enable faster,
higher precision volume manufacturing techniques with lower power consumption,
reduced manufacturing footprint and increased productivity. These capabilities
are critical as industries develop products that are smaller and lighter, increasing
productivity and yield and lowering their energy consumption.
Our optical and laser solutions, developed in close collaboration with OEM partners,
are well positioned to meet demand resulting from these trends. We do, however,
expect to continue to encounter a number of industry and market risks and uncertainties.
These risks and uncertainties may limit our visibility, and consequently, our
ability to predict future revenue, profitability and general financial performance,
and could create quarter over quarter variability in our financial measures.
For example, the demand environment in China has fluctuated significantly in
recent years, and has created volatility and uncertainty in our future demand.
We cannot predict when or to what extent these uncertainties will be resolved.
Our revenues, profitability and general financial performance may also be affected
by: (i) pricing pressures, particularly within our OpComms markets, due to,
among other things, a highly concentrated customer base, increasing competition,
particularly from Asia-Pacific-based competitors, and a general commoditization
trend for certain products; (ii) high product mix variability which affects
revenue and gross margin; (iii) fluctuations in customer buying patterns, which
cause volatility in demand, revenue and profitability; and (iv) the current
trend of communication industry consolidation, which is expected to continue,
that directly affects our customer bases and adds additional risk and uncertainty
to our financial and business projections.