Let’s try to read into this best we can.
AAOI makes most of their money selling equipment to datacenter, Amazon being their biggest customers, for 40g technology. The reason why people were buying AAOI was for the upgrade cycle to 100g. In the past, the company missed earnings, likely due to the upgrade cycle taking longer than expected. It is also possible that Amazon is squeezing them or using other vendors to reduce costs.
Either way, they just offered a terrible warning, which is bound to send shares swimming lower. This does not mean, however, the play for 100g is over. It merely means AAOI isn’t executing and is likely being squeezed by AMZN.
Applied Optoelectronics prelim Q3 $1.04-1.09 vs $1.31 Capital IQ Consensus Estimate; revs $88-89 mln vs $111.53 mln Capital IQ Consensus Estimate
“Our preliminary results for the third quarter fell short of prior estimates and were negatively impacted by lower than expected sales to one of our large datacenter customers. Despite this shortfall, we maintained a strong gross margin profile in the quarter, and continued to experience solid demand with our other top datacenter customers,” said Dr. Thompson Lin, Applied Optoelectronics, Inc. founder, president and CEO. “Although we are disappointed with these preliminary results, we continue to feel good about our leadership position in advanced optics and remain optimistic based on the customer traction we are seeing with our 100G products, especially our 100G CWDM transceivers.”
This is reminiscent of when Apple used to squeeze their vendors.
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