Shares of Lumentum Holdings $LITE are sharply higher after investors put a higher premium on the consumer electronics potential ahead of its near term fiber optic woes.
3D SENSING OPPORTUNITY: On its earnings conference call held earlier today, CEO confirmed that the company has received “volume” 3D sensing production orders for delivery in the September quarter. Amid industry speculation that #Lumentum or #Finisar $FNSR or both may be chosen by #Apple $AAPL as suppliers for 3D densor devices, the CEO highlighted that “We expect 3D sensing to be a significant growth driver over the coming years.”
Apple is said to be interested in 3D technology to enhance the new iPhone version with facial recognition as well as augmented reality. Referring back to earlier 3D comments, the CEO added that the “multimillion unit orders are just the initial orders. We expect to be receiving orders on a weekly basis moving forward to cover our lead times. As I said in the prepared remarks, we have been approved to start volume production. And so, we are ramping our production to be able to achieve the volumes and our customers need in the short-term. And you can imagine that the cycle time of 3D sensing for us a few months, and so, given that we are in production today, you can determine when the production ramp starts and given a 13-week lead cycle time. So we will be ramping through the quarter. And in the December quarter, we will be at full volume production capability assuming the program goes as we expect.”
Adding to investors’ enthusiasm for the 3D sensor potential in consumer electronic, Chief Financial Officer said that 3D sensing gross margins will be “significantly north of our corporate gross margin average and it’s going to be should be over 50%.”
PRICE ACTION: $LITE is up 11% to $47.45 in afternoon trading, while rival Finisar is up nearly 2% to $23.01.
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Market research firm #IDC yesterday released its estimates of Q1 #smartphone shipments in China, reporting that total shipments to the country rose just 1% to 104.1M partly due to “high inventory” from the previous quarter.
Breaking the quarter down by company-specific performance, #Huawei took the top spot with shipment growth of 25.5%, while #Apple $AAPL took fourth place on a 26.7% decline in shipments.
IDC commented, “Despite a soft first quarter in China, the second quarter should pick up sequentially given not only #JD.com’s $JD June promotions, but also activity around a number of new products like vivo with its Y53, #Xiaomi with its Mi 6, Meizu with its E2, and Gionee with its M6S Plus.
Apple has been seeing double-digit YoY declines for the fifth quarter in a row, but we believe that Chinese consumers are holding out for the launch of Apple’s 10-year anniversary iPhone at the end of the year.” Other publicly traded companies in the space include #Samsung $SSNLF .
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#NYMEX #crude crashed through the $47.00 level in early Thursday N.Y. trade, with sell-stops kicking in on the break under the March low of $47.01.
The contract has printed $46.77 lows, levels last seen on November 30. A smaller than expected inventory draw reported on Wednesday set the stage for this morning’s sell-off, as did #EIA data showing gasoline demand over the past month falling 3% versus this time in 2016.
Rig count continues to climb. Another 9 oil rigs were deployed in America’s shale fields, a sign that the industry is undaunted by falling oil prices. But the ability to produce profitably at $50 per barrel suggests downward pressure on prices, as more production is slated to come online later this year.
OPEC Production: Production from Saudi Arabia remained low in April, and output fell in Nigeria and Libya, although the latter two countries are exempted from the OPEC deal. Meanwhile, Angola and the UAE actually added production, leading to a slight fall in the OPEC-wide compliance rate from 92 percent in March to just 90 percent in April.
Russia also reported incremental progress on its pledge, reducing output to 11 million barrels per day from 11.05 mb/d in March, still a bit shy of the 300,000 bpd that it promised to cut.
Hedge funds Turn Bearish. Investors are losing confidence in oil prices – hedge funds and other money managers slashed their net-long positions once again, according to the latest data. For the week ending on April 25, the reduction was the largest weekly decline on record. Investor sentiment, according to the makeup for their long and short positions, now looks more bearish than it did at the start of the year.
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