Alliance Fiber Optic Products, Inc. (NASDAQ:AFOP), an innovative
supplier of fiber optic components, subsystems and integrated
modules for the optical network equipment market, today reported
its financial results for the second quarter ended June 30, 2007.
Revenues for the second quarter of 2007 totaled $8,701,000, a 39%
increase from revenues of $6,252,000 recorded in the second quarter
of 2006 and 30% increase compared with revenue of $6,701,000 for
the first quarter of 2007. The Company recorded a net profit for
the second quarter of 2007 of $864,000, or $0.02 per share,
significantly improved over $0.00 per share of the second quarter
of 2006. This compares to a net profit for the first quarter of
2007 of $389,000, or $0.01 per share. Included in the net profit
for the quarter ended June 30, 2007 was $103,000 of stock-based
compensation charges under FAS 123(R). Included in expenses for the
quarter ended June 30, 2006 and the first quarter of 2007 were
$32,000 and $124,000 of stock-based compensation charges under SFAS
123(R), respectively. Peter Chang, President and Chief Executive
Officer, commented, �We are very pleased with the financial
progress made in the quarter ended June 30, 2007. In addition to
39% revenue growth compared with the year ago quarter, the second
quarter of 2007 marked an important milestone in AFOP quarterly
financial history � AFOP generated record operating profits of
$375,000 and record net profits of $864,000 in the quarter ended
June 30, 2007. Both are improved considerably compared with either
the first quarter of 2007 or the year ago quarter.� �We believe our
performance in revenue growth and profitability improvement
reflects increasing demand from key customers, solid progress in
product development, and continued improvement of our
operations.�Our balance sheet remains strong, with cash and cash
equivalents increasing by almost $1 million in the second quarter
of 2007 to over $32 million.� �Based on input from our customers
and current backlog, we expect that revenues in the quarter ended
September 30, 2007, will be above $9 million. Additionally, with
our continuing focus on operational efficiencies, we believe
profitability in the second half of 2007 will continue to improve,�
concluded Mr. Chang. Conference Call Management will host a
conference call at 1:30 p.m. Pacific Time on July�25, 2007 to
discuss AFOP�s second quarter 2007 financial results. To
participate in AFOP�s conference call, please call 877-407-9210 at
least ten minutes prior to the call in order for the operator to
connect you. The confirmation number for the call is�249079. AFOP
will also provide a live webcast of its second quarter 2007
conference call at AFOP�s website: www.afop.com. An audio replay
will be available until August�1, 2007. The dial in for the replay
is 877-660-6853. The replay pass-codes (account # 286; conference
ID#: 249079) are both required for the replay. About AFOP Founded
in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures
and markets a broad range of high performance fiber optic
components and integrated modules. AFOP's products are used by
leading and emerging communications equipment manufacturers to
deliver optical networking systems to the long-haul, enterprise,
metropolitan and last mile access segments of the communications
network. AFOP offers a broad product line of passive optical
components including interconnect systems, couplers and splitters,
thin film DWDM components and modules, fixed and variable optical
attenuators, and depolarizers. AFOP is headquartered in Sunnyvale,
California, with manufacturing and product development capabilities
in the United States, Taiwan and China. AFOP's website is located
at http://www.afop.com. Except for the historical information
contained herein, the matters set forth in this press release,
including statements as to our future prospects, our ability to
control expenses, our ability to improve operational efficiencies,
our order trends and customer demand, our product development
progress, and future revenue growth and profitability, are forward
looking statements within the meaning of the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially,
including, but not limited to, general economic conditions and
trends, the impact of competitive products and pricing, timely
introduction of new technologies, timely design acceptance by our
customers, the acceptance of new products and technologies by our
customers, customer demand, the timing of customer orders, loss of
key customers, ability to ramp new products into volume production,
industry-wide shifts in supply and demand for optical components
and modules, industry overcapacity, failure of cost control
initiatives, financial stability in foreign markets, and other
risks detailed from time to time in our SEC reports, including
AFOP's Form 10-Q for the quarter ended March 31, 2007. These
forward-looking statements speak only as of the date hereof. AFOP
disclaims any intention or obligation to update or revise any
forward-looking statements. ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Balance Sheets (in thousands) (Unaudited) �
Jun. 30, Dec. 31, 2007 2006 � ASSETS Current assets: Cash and
short-term investments $ 32,186 $ 31,178 Accounts receivable 5,184
4,009 Inventories 5,226 4,465 Other current assets � 614 � 601
Total current assets 43,210 40,253 � Property and equipment, net
4,217 4,264 Other assets 178 176 � � Total assets $ 47,605 $ 44,693
� � � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 3,873 $ 2,950 Accrued expenses and other
liabilities � 2,999 � 2,909 Total current liabilities 6,872 5,859 �
Long-term liabilities � 904 � 930 Total liabilities 7,776 6,789 �
Stockholders' equity 39,829 37,904 � � Total liabilities and
stockholders' equity $ 47,605 $ 44,693 ALLIANCE FIBER OPTIC
PRODUCTS, INC. Condensed Consolidated Statements of Operations (In
thousands, except per share amounts) (Unaudited) � Three Months
Ended Six Months Ended Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2007 2007 2006 2007 2006 � Revenues $ 8,701 $ 6,701 $ 6,252 $
15,402 $ 11,473 � Cost of revenues � 5,929 � 4,602 � � 4,621 � �
10,531 � 8,505 � Gross profit � 2,772 � 2,099 � � 1,631 � � 4,871 �
2,968 � � Operating expenses: Research and development 848 689 708
1,537 1,467 Sales and marketing 634 569 555 1,203 1,141 General and
administrative � 915 � 861 � � 720 � � 1,776 � 1,483 � Total
operating expenses 2,397 2,119 1,983 4,516 4,091 � Income (loss)
from operations 375 (20 ) (352 ) 355 (1,123 ) Interest and other
income, net 489 409 371 898 769 � � � � � Net income (loss) $ 864 $
389 � $ 19 � $ 1,253 $ (354 ) � Net income (loss) per share: Basic
$ 0.02 $ 0.01 $ 0.00 $ 0.03 $ (0.01 ) Diluted $ 0.02 $ 0.01 $ 0.00
$ 0.03 $ (0.01 ) � Shares used in per share calculation: Basic
40,825 40,539 40,086 40,706 39,930 Diluted 45,608 44,664 40,086
45,489 39,930 � Included in costs and expenses above: Stock based
compensation charges Cost of revenue $ 41 $ 51 $ 9 $ 92 $ 32
Research and development 17 20 6 37 20 Sales and marketing 12 12 4
24 16 General and administrative � 33 � 41 � � 13 � � 74 � 41 �
Total $ 103 $ 124 � $ 32 � $ 227 $ 109 �
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