Silicon Investor - Optical Networks and Components, DWDM and Tunable Lasers

[jim heger] Nice week for AAOI - up over 30%. The huge short position had to unwind at some ...

jim heger — 6/1/2018 9:08:08 PM

Nice week for AAOI - up over 30%.
The huge short position had to unwind at some point and the increase in shares traded
suggests that has begun in earnest. A positive presentation at Cowen's Technology Conference had to help
motivate the shorts, while there has been a clear trend reversal on the chart.
Sales of 100G transceivers were predicted to double in the 2nd half of 2018, and double again in 2019.
Competitors are leaving the market because of their inability to compete with AOI's vertically integrated mfg. model. Top customers remain - Amazon, Facebook & Microsoft, each greater than 10%.
The threat of Intel trying to enter the market with low cost product may be unfounded.
There's a lot of good stuff here:
investors.ao-inc.com

[JakeStraw] Lumentum Announces Fiscal Third Quarter 2018 Results investor.lumentum.com

JakeStraw — 5/2/2018 8:50:13 AM

[JakeStraw] Acacia, Lumentum Fall As ZTE Ban Hits Optical Component Makers investors.com Sha...

JakeStraw — 4/16/2018 9:56:57 AM

Acacia, Lumentum Fall As ZTE Ban Hits Optical Component Makers
investors.com
Shares in optical device makers plunged after the U.S. Commerce Department banned U.S. companies from selling components to Chinese telecom gear maker ZTE following a probe into illegally shipped equipment to Iran and North Korea.

[jim heger] Finally a bump in AAOI shares as Rosenblatt analyst cites market gains: Over th...

jim heger — 4/11/2018 4:33:32 PM

Finally a bump in AAOI shares as Rosenblatt analyst cites market gains:

Over the past month we have observed many interesting changes in the optical market. Our research suggests that Applied Optoelectronics has gained share at Facebook versus Innolight. We believe that AAOI could grow its share around CWDM4 from what we estimate is currently around 10% to 30-35%, in line with Intel. We believe that AAOI is seeing improved traction due to its aggressive pricing and ongoing quality issues at Innolight. Given these factors, we believe AAOI could take share at Amazon as well as H3C in Q2. As AAOI’s confidence grows, we would look for the company to grow its manufacturing capacity in order to fulfill rush orders. Based on this research, we believe AAOI could see a strong sequential rebound in Q2, coming off what we believe will be a weak Q1.

[JakeStraw] Here's The Upshot On Possible Mergers In The Optical Industry investors.com

JakeStraw — 3/15/2018 11:52:52 AM

[JakeStraw] Lumentum Showcases 400G Transceiver Portfolio For Next-Generation Data Centers m...

JakeStraw — 3/14/2018 3:56:08 PM

Lumentum Showcases 400G Transceiver Portfolio For Next-Generation Data Centers
markets.siliconinvestor.com

[JakeStraw] Optics tech firm Lumentum buys Oclaro for $1.7 billion finance.yahoo.com

JakeStraw — 3/12/2018 11:49:41 AM

[JakeStraw] Applied Optoelectronics Reports Fourth Quarter and Year 2017 Results markets.sil...

JakeStraw — 2/22/2018 10:31:32 AM

Applied Optoelectronics Reports Fourth Quarter and Year 2017 Results
markets.siliconinvestor.com
“We achieved revenue in the fourth quarter of $79.9 million, which was slightly below our expectations due to lower demand from our datacenter customers as they continue to evolve their network architectures. While our revenue came in slightly below expectations, I am pleased with our ability to continue to generate strong gross margin even in a price sensitive market,” said Dr. Thompson Lin, Applied Optoelectronics Inc. founder and CEO. “Even though we see inventory headwinds with one of our customers and the typical seasonality in Q1 due to fewer production days in China because of the Lunar New Year, we continue to expect the second half of 2018 to be stronger than the first half. We believe we have a strong leadership position in advanced optics, and this belief is bolstered by a large purchase commitment that we disclosed earlier today.”

[JakeStraw] Applied Optoelectronics: Ugly Q3 Miss, Transitory Amazon Weakness - Buy The Dip ...

JakeStraw — 10/13/2017 11:22:14 AM

Applied Optoelectronics: Ugly Q3 Miss, Transitory Amazon Weakness - Buy The Dip
seekingalpha.com

[jim heger] Good interview with Murry. I'm using this latest smack down to add shares below...

jim heger — 9/12/2017 8:30:46 AM

Good interview with Murry. I'm using this latest smack down to add shares below $60.
Back in the 90's we saw the electronics contract manufacturers (Plexus, Flextronics, Jabil, etc.)
grow bigger & faster than most could imagine. The time was right for the products & services they offered.
It appears to me that the time is right for the optical component manufacturers and that AAOI has shown itself to be one of the best. Jay Deahna's call (on Seeking Alpha) for $125 doesn't seem at all out of line.
And given a buoyant market, over time the stock could well exceed that.

[JakeStraw] Applied Opto CFO Murry Defends Its Leadership in Fiber Optics barrons.com Stefan...

JakeStraw — 9/12/2017 8:15:53 AM

Applied Opto CFO Murry Defends Its Leadership in Fiber Optics
barrons.com
Stefan Murry, chief financial officer, and one of the founders, of fiber-optic component supplier, defends his company against worries about losing market share, especially with top customer Amazon, and how Wall Street underestimates the company's manufacturing prowess, something that will allow it to remain the leader in low-cost production of parts, he says.

[JakeStraw] Two Stocks to Play China Optical Market Lumentum Holdings and Finisar are favore...

JakeStraw — 8/31/2017 8:04:21 AM

Two Stocks to Play China Optical Market
Lumentum Holdings and Finisar are favored as they have 3D-sensing exposure in the second half
barrons.com

Aug. 30, 2017 2:59 p.m. ET

MKM Partners

Last week, China Mobile initiated a tender for 42,200 Optical line side ports. According to our checks, this tender is part of China Mobile’s Phase 13 Provincial backbone network slated to be built in 2018.

It joins China Mobile’s (ticker: CHL) Phase 12 national backbone expansion in terms of tenders that have been let with vendor awards made, but where the bulk of orders have not yet started through the supply chain. According to our work, the Chinese original equipment manufacturers (OEMs) are still waiting for China Mobile to begin Phase 12- and Phase 13-related orders, and for China Telecom (CHA) to start some of its smaller, already announced new Metro/ROADM networking orders.

Despite some promising signs, the Chinese Optical market remains weak at the moment. While the new Phase 13 tender is a positive indicator for the Chinese Optical market, we are still disappointed overall by the timing of new projects and orders, and by the overall size of the new announced tenders. According to our math, the new Phase 12 and Phase 13 tenders, combined, are less than 60,000 line side ports, or roughly half the size of the Phase 11 tender in late 2015 that drove the six-quarter hockey stick for Chinese Optical demand from fourth-quarter 2015-first-quarter 2017. It is positive we are seeing new tenders, but it is negative we are not seeing immediate orders behind the tenders like there were for Phase 11. We think the overall greater industry capacity for 100+G-and-above products could be part of the reason the Chinese Service Providers are not in as much of a rush to place orders today as they were two years ago.

The most positive indicator we are seeing for Chinese Optical is that OEM equipment inventories look like they are finally back to normal. The Chinese OEMs are not currently providing much in terms of forecast visibility to the Optical component vendors. However, the OEMs have been shipping Optical systems to their customers (at home and abroad) at a robust clip. Based on our checks, we think the U.S. component vendors could begin to receive orders for fourth-quarter inventory restocking from Chinese OEMs over the next couple of months.

Based on guidance from the component companies, Chinese Optical demand is set to bottom in the third quarter at a level 30%-40% below the first quarter. We expect the combination of inventory re-stocking and new Phase 12/13 and Provincial/Metro orders to drive demand back up in the fourth quarter and first-quarter 2018. First-quarter 2018 orders could potentially be back to near first-quarter 2017 peak. However, we do not expect to see much sequential growth in second-quarter 2018-fourth-quarter 2018. It is more likely, in our view, that quarterly demand (in dollar terms) flattens out in 2018 with any further volume growth above first-quarter 2018 levels likely to be offset by pricing. According to our checks, the “peak” run rate in China is likely 15,000-20,000 line side ports per quarter for “ambient” demand and another 15,000-20,000 line side ports per quarter for the China Broadband 2020 project.

Chinese OEM spending on U.S. Optical components increased roughly 100% year-over-year in 2016. Following a down year in 2017, we are modeling 20% Chinese Optical spending growth in 2018. Again, this assumes demand increases in fourth-quarter 2017 and first-quarter 2018, and remains fairly level with first-quarter 2018 in second-quarter 2018-fourth-quarter 2018. We are also assuming a fairly normal pricing environment, which is a risk factor. Given the current capacity and competition in the industry, 2018 pricing could turn out to be worse than we are assuming, in which case Chinese Optical component-market growth could turn out to be less than 20%.

We remain fairly subdued on the outlook for Optical in China versus expectations, even when the new Phase 13 tender is considered. Investors are expecting demand improvement in fourth-quarter 2017 and first-quarter 2018, and we think the risk/reward related to this expectation is fairly balanced. In other words, we don’t think the improvement in Optical in China is going to be much better than most expect, and it could actually turn out to be worse. We see a much greater chance of upside in the second half versus expectations from 3D sensing than from Optical components.

Within the Optical components landscape, we prefer to focus on names like Lumentum Holdings (LITE) (rated at Neutral, $66 fair-value estimate) and Finisar (FNSR) (rated at Buy, $35 price target) with 3D-sensing exposure in the second half.

[JakeStraw] Fabrinet Announces Fourth Quarter and Fiscal-Year 2017 Financial Results markets...

JakeStraw — 8/22/2017 9:42:22 AM

Fabrinet Announces Fourth Quarter and Fiscal-Year 2017 Financial Results
markets.siliconinvestor.com

[jim heger] Not me, but I'm holding what I've got. I had sold calls that will expire worthle...

jim heger — 8/4/2017 4:37:58 PM

Not me, but I'm holding what I've got.
I had sold calls that will expire worthless, but
not nearly enough to cover today's beat down.
I'm looking 6 months out now & like the chances of a recovery to yesterdays level.

[JakeStraw] AAOI down around 33% today... Anyone brave enough to buy?

JakeStraw — 8/4/2017 3:38:45 PM

[jim heger] Deahna raised his target now to $125. Short sellers are getting crushed. seekin...

jim heger — 7/18/2017 12:04:12 PM

Deahna raised his target now to $125.
Short sellers are getting crushed.

seekingalpha.com

[jim heger] Yeah, I'm hanging on to my shares. Most recent ( 6.30) short interest over 10 mi...

jim heger — 7/14/2017 1:56:50 PM

Yeah, I'm hanging on to my shares.
Most recent ( 6.30) short interest over 10 million shrs. - more than half the float.
Short squeeze in progress.

[JakeStraw] Applied Optoelectronics, Inc. (NASDAQ:AAOI) had its price target raised by analy...

JakeStraw — 7/14/2017 12:15:00 PM

Applied Optoelectronics, Inc. (NASDAQ:AAOI) had its price target raised by analysts at Needham & Company LLC from $85.00 to $100.00. They now have a "strong-buy" rating on the stock.

[jim heger] Applied Opto (AAOI) smashed its own guidance & shot ahead 20% after hours. The...

jim heger — 4/12/2017 7:20:24 PM

Applied Opto (AAOI) smashed its own guidance & shot ahead 20% after hours.
The data center interconnect business is roaring ahead and AAOI is at the epicenter.

[JakeStraw] Fiber Optic Stocks Are Hot, But This Is Why M&A Is On The Back Burner investors...

JakeStraw — 3/24/2017 2:53:34 PM

Fiber Optic Stocks Are Hot, But This Is Why M&A Is On The Back Burner
investors.com

[JakeStraw] Oclaro Strengthens Lithium Niobate Portfolio with High-Bandwidth Single and Dual...

JakeStraw — 3/21/2017 9:13:14 AM

Oclaro Strengthens Lithium Niobate Portfolio with High-Bandwidth Single and Dual Carrier PM-QMZ Modulators
finance.yahoo.com

"This announcement builds upon Oclaro's proven track record in delivering high-speed, high-volume lithium niobate external modulators that our customers need to deploy 400G and 600G networks," said Adam Carter, Chief Commercial Officer at Oclaro, Inc. "By adding a two wavelength capability to our already proven single wavelength product portfolio, we can now provide customers with the flexibility to design next-generation networks based on their cost, performance and power requirements."

[jim heger] AAOI has been on an incredible run. Jay Deahna on SA has been all over it from t...

jim heger — 3/2/2017 3:01:56 PM

AAOI has been on an incredible run.
Jay Deahna on SA has been all over it from the $20s and now has
increased his target to $80.
His is a must read:

As expected, C1Q2017 EPS guidance of $0.80-0.88 far exceeded pre-call consensus of $0.40. Consensus for C2017 is now $3.39, up from $2.09 pre-call and remains too low.AAOI shares have multiple upside catalysts, including earnings vs. Street estimates and importantly, significant stock multiple expansion potential.AAOI shares are very undervalued in my view - raising 2017 EPS estimate to $4.00 from $3.00, setting C2018 at $5.00 and price target increases to $80 from $54.

seekingalpha.com

[JakeStraw] Edited Transcript of AAOI earnings conference call or presentation 23-Feb-17 fin...

JakeStraw — 2/24/2017 3:17:57 PM

Edited Transcript of AAOI earnings conference call or presentation 23-Feb-17
finance.yahoo.com