AAOI's Drop Inflicts Emotional Damage

Applied Optoelectronics (AAOI) delivered a strong quarterly report last week, but when the company warned its top-line number would show a quarter-over-quarter decline and come in well under analysts' estimates, shares were pummeled. Management pointed to an expected slowdown in their 40G product line. While this is disappointing for next quarter, there are a few things to consider. 

First, management did not guide down earnings-per-share numbers. The estimate still falls within the range of analysts' estimates for the quarter. Second, 40G is the past. AAOI is focused on higher-speed product lines like 100G, 200G and beyond. That is where the market is moving and where long-term growth for the company rings true. Demand is rising for the higher-speed products. Not only is AAOI the market leader, but its vertical integration model allows the company to meet demand quicker than competitors and innovate faster. ...272 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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