Shares of Applied Optoelectronics Inc. (NASDAQ: AAOI) jumped as much as 23.6% higher in Wednesday's morning session, following the release of strong second-quarter results. By 11 a.m. EDT, the stock had cooled down somewhat to a 15% overnight gain.
The maker of fiber-optic networking modules and components saw second-quarter sales falling 25% year over year to land at $87.8 million, comfortably ahead of Wall Street's $77.8 million expectations. On the bottom line, adjusted earnings decreased 58% to $0.64 per diluted share, also far above analysts' $0.45 expectations.
Looking ahead, AOI centered its third-quarter earnings guidance around $0.65 per share, just ahead of the Street's current $0.64 consensus estimates. Revenue guidance of approximately $87 million stopped short of the $90 million analyst view.
Data center orders drove the second quarter's revenue surprise as AOI's customers continued to adopt its high-end 100-gigabit transceivers . Management is "pleased" with the order flows from its regular top customers, but the company is still trying to diversify its operations to a broader customer base. The 100-gig orders should double to roughly $80 million per quarter in the second half, based on the backlog of committed orders that have not yet been shipped. The emerging longer-term trends are also looking good, as the quarterly 100G sales should double again in 2019.
Applied Optoelectronics shares have now nearly doubled from April's 52-week lows, but have a long way to go before conquering the $103 price they briefly touched in the summer of 2017 . It's no surprise to see investors celebrating the company's return to form, without getting too excited about the long recovery ahead.
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