Applied Optoelectronics Inc. (NASDAQ: AAOI) Lands Heavyweight Customer


An unnamed hyperscale datacenter customer has placed an initial order for Applied Optoelectronics Inc. (NASDAQ: AAOI)’s market leading optical transceiver modules. In addition to not naming the customer, the financial value of the order has also been kept secret.

What we know

The particular transceiver modules that have been ordered are of the 40 Gbps QSFP+ and 100 Gbps QSFP28 type. If you have been following Applied Optoelectronics Inc (NASDAQ: AAOI) for any amount of time, you know that these are market leading products.

Though the actual value of the deal is not being mentioned, AAOI said that customer has ordered more than 10,000 units of the transceivers. The company intends to deliver the order over the coming quarters.

The types of transceivers that have been ordered by the shadowy customer are known to be used for intra-datacenter applications. They are also favored for high speed routing and switching.

What’s rumored?

It is rumored that the hyperscale datacenter customers that have placed a large order for AAOI’s transceivers could be Facebook Inc (NASDAQ: FB). But that remains just a speculation.

What does the future look like?

As much as Applied Optoelectronics Inc. (NASDAQ: AAOI) is not willing to talk about the identity of its new large customer, the management believes they have an opportunity to deepen relationship with that customer.

If AAOI manages to develop a long-term relationship with the hyperscale customer, it could result in tremendous improvement in the company’s financial performance.

CEO Thompson Lin revealed that AAOI has spent more than $70 million over the last four quarters in modernizing its R&D facilities to enable it lower production costs and speed up production processes. That means that AAOI feels it is in control as heavyweight customers come asking for its market leading transceivers.

How Applied Optoelectronics Inc. (NASDAQ: AAOI) fared in 2Q2016

Applied Optoelectronics Inc. (NASDAQ: AAOI) generated revenue of $53.3 million in 2Q2016, which rose 10% QoQ and 11% YoY. The company posted EPS of $0.16 in the latest quarter compared to EPS of $0.04 in the prior quarter.

3Q2016 outlook

The management of AAOI sees 3Q2016 revenue coming in the band of $56 to $59 million, while EPS for the quarter is expected in the range of $0.16 to $0.21.


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