What happened
Optical equipment specialist Infinera (INFN -0.20%) underperformed the market last month by shedding 18% compared to a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The slump added to a volatile year for shareholders. The stock had been up by more than 90% at one point and is now in slightly negative territory.
So what
September's drop occurred as investors braced for the possibility that Infinera might lose a key customer to a rival, which would threaten management's sales and profit forecasts for the year.
Image source: Getty Images.
Now what
If Infinera does lose this key customer account, then investors can expect the company's short-term outlook to be lowered during its next earnings report, given that the client represented about 17% of sales last year. The good news is the optical equipment giant is working to reduce its reliance on just a few contracts through its pending acquisition of industry peer Coriant. Shareholders will be looking forward to hearing updates on that buyout, and on Infinera's broader customer positioning, when the company reports fiscal third-quarter earnings numbers in the coming weeks.
