The Stock That Went Up 1000% | Lumentum CEO

**Michael Hurlston** (0:00)
I joined Lumentum at a time where board of directors showed me a forecast, and they said, hey, here's what we think the company is gonna do. And I, of course, discounted it by about 50%, and it's been probably 4X over what they even showed me. We've been there about five quarters now. And in those five quarters, we've tripled our top-line revenue. So the stock price has gone up 10 or 12 times. One point it was up over $1,000.
We have a high-performing stock, largely because people are seeing the future. Now we're being asked by these hyperscalers to deploy in millions, tens of millions of units. So it's really changed the dynamic in our industry, not just for Lumentum. Every single optical company now is dealing with different scales than we ever had before. The question we get all the time, and I think you've asked many of the people on your show, is, is this a bubble?

**Molly O'Shea** (0:58)
Michael, welcome to Sourcery.

**Michael Hurlston** (1:00)
Molly, thanks for having me on. Really a pleasure.

**Molly O'Shea** (1:03)
So we're here in Paris at RAYS. Were you just on stage? What were you doing over there?

**Michael Hurlston** (1:06)
I was on stage. I gave a keynote with Tony Kim, and I think Tony Kim was over here earlier today talking to you. So you got all the celebs, I guess.

**Molly O'Shea** (1:14)
Yeah. He's a big fan of you, by the way. I didn't know if you knew that.

**Michael Hurlston** (1:19)
He's a big fan of yours too. He told me, he goes, this is a great setup, you'll enjoy it. I have a lot of fun talking to Molly. So there we go.

**Molly O'Shea** (1:26)
So what did you guys talk about on stage?

**Michael Hurlston** (1:28)
Optics is becoming a big thing in the data centers, and Tony was framing. We have all these funny terms, scale across, scale out, scale up, scale in, and Tony was walking the audience through what all of these different things mean, and what Lumentum's role is in all of that, which is, we're in the middle of a pretty exciting time right now, is the data center uses more and more optical connectivity.

**Molly O'Shea** (1:53)
So for people who don't know what optical connectivity means, can you explain that? We're moving from copper wires to optics and transferring data with light, but what does that mean?

**Michael Hurlston** (2:05)
Obviously there are fibers, and fibers are essentially glass, they're just conductors. Instead of having wires, copper wires, you have fibers, and fibers basically contains the light, just like a wire or a copper strand contains electricity.
So what you get with fiber optics is the ability to move data faster, over longer distances with less heat and less power than you get with electricity. So if you think about the way data centers are architected today, it's mostly copper wires, right? Ethernet cables are essentially copper wires, and copper wires, the physics of copper is there's a resistive property. So as data tries to move across the wires, it gets hotter and the resistance prevents it from going all that far. So now inside the data center, you have speeds are increasing, bandwidths are increasing, and copper can no longer carry these signals, the distances they need to go, and so you have more and more optics now coming into the data center, and optics essentially is just light, right? We're just shining light along a fiber, and that light is modulated, meaning it turns on and off at really, really high speeds, and that's what creates the transmission.

**Molly O'Shea** (3:31)
I think it was Tony, we were on a call before our interview, and he was pointing out the great irony of spending $10 trillion over the next couple years on data center buildout to move data from meters down to centimeters and millimeters. So how is this process and this buildout, how are you managing it?

**Michael Hurlston** (3:52)
Yeah, look, I mean, fiber optics has been the backbone of the internet for years, right? So when the internet first came in, was the first great wave of the optical companies. And what happened was you're digging up the earth in the United States, in Paris, in London, wherever it might be, and installing these fiber optic cables because the internet now is traveling over huge distances. And so the first real optical, sort of the big wave was now building the backbone of our internet infrastructure across the world. And you actually have fiber optic cables today that run under the ocean. So if we want to have communication that goes between Paris and New York, there are fiber optic cables that are actually buried in the ocean and those fiber optic cables conduct these signals. But as I said a minute ago, what's happened is, now you're going to faster and faster speeds. And when you go to faster and faster speeds, the physics say that copper can't work or it doesn't work as well.