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, 2006.
The Company's GAAP results reflect the adoption of SFAS 123R
regarding the expensing of stock-based compensation. Revenues for
the second quarter of 2006 totaled $6,252,000, a 20% increase from
revenues of $5,221,000 recorded in the first quarter of 2006 and
21% increase compared with $5,178,000 for the year ago quarter. The
Company recorded a net profit for the second quarter of 2006 of
$19,000, or $0.00 per share, and improved over a net loss for the
first quarter of 2006 of $(373,000), or $(0.01) per share. This
compares to a net loss for the second quarter of 2005 of
$(720,000), or $(0.02) per share. Included in the expense for the
quarter ended June 30, 2006 was $32,000 of stock-based compensation
charges under SFAS 123R. Included in the expense for the quarter
ended March 31, 2006 was $77,000 of stock-based compensation
charges under SFAS 123R. There were no deferred stock-based
compensation charges for the quarter ended June 30, and March 31,
2005, respectively. Peter Chang, President and Chief Executive
Officer, commented, "The second quarter of 2006 marked an important
milestone in AFOP's quarterly financial results -- AFOP returned to
profitability. In the second quarter, not only did sales grow by
20% but gross margin also continued improving by 5% better than the
year ago quarter." "Our performance reflects increasing demand from
key customers, solid progress in product development, and
continuous improvement of our operations in Asia. Our balance sheet
remains strong with cash and cash equivalents slightly increased
from previous quarter at over $29 million." "Based on input from
our customers and current backlog, we expect that revenues will
improve sequentially by 10 percent in the third quarter of 2006.
Additionally, with continuous focus on operational efficiencies, we
believe we will remain profitable in the coming quarter," concluded
Mr. Chang. Conference Call Management will host a conference call
at 1:30 p.m. Pacific Time on July 25, 2006 to discuss AFOP's second
quarter 2006 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 207081. AFOP will also provide a live
webcast of its second quarter 2006 conference call at AFOP's
website www.afop.com. An audio replay will be available until
August 1, 2006. The dial in number for the replay is 877-660-6853
or 201-612-7415. The replay passcodes (account # 286; conference
ID#: 207081) 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 CWDM & DWDM components and modules, optical
attenuators, and micro-optics devices. 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 ability to remain
profitable, our ability to increase revenues and the extent of any
revenue increase, the increase in customer demand for our products,
our ability to maintain product development, our ability to
continue to improve our Asian operations, our ability to continue
to improve our gross margins, and our ability to control expenses,
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 for our products, the timing of customer
orders, loss of key customers, ability to ramp new products into
volume production, the costs associated with running our
operations, 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, 2006.
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. -0- *T ALLIANCE FIBER OPTIC PRODUCTS,
INC. Condensed Consolidated Balance Sheets (in thousands)
(Unaudited) Jun. 30, Dec. 31, 2006 2005 ----------- ------------
ASSETS Current assets: Cash and short-term investments $ 29,366 $
29,407 Accounts receivable 3,741 3,570 Inventories 4,239 3,670
Other current assets 590 634 ----------- ------------ Total current
assets 37,936 37,281 Property and equipment, net 4,172 4,564 Other
assets 132 105 ----------- ------------ Total assets $ 42,240 $
41,950 =========== ============ LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $ 2,646 $ 2,342
Accrued expenses and other liabilities 2,326 2,428 -----------
------------ Total current liabilities 4,972 4,770 Long-term
liabilities 834 859 ----------- ------------ Total liabilities
5,806 5,629 Stockholders' equity 36,434 36,321 -----------
------------ Total liabilities and stockholders' equity $ 42,240 $
41,950 =========== ============ 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, 2006 2006 2005 2006 2005 --------
-------- -------- -------- -------- Revenues $ 6,252 $ 5,221 $
5,178 $11,473 $10,184 Cost of revenues 4,621 3,884 4,077 8,505
8,152 -------- -------- -------- -------- -------- Gross profit
1,631 1,337 1,101 2,968 2,032 -------- -------- -------- --------
-------- Operating expenses: Research and development 708 759 882
1,467 1,834 Sales and marketing 555 586 560 1,141 1,134 General and
administrative 720 763 713 1,483 1,463 -------- -------- --------
-------- -------- Total operating expenses 1,983 2,108 2,155 4,091
4,431 Loss from operations (352) (771) (1,054) (1,123) (2,399)
Interest and other income, net 371 398 334 769 867 --------
-------- -------- -------- -------- Net income (loss) $ 19 $ (373)
$ (720) $ (354) $(1,532) ======== ======== ======== ========
======== Net income (loss) per share - basic and diluted $ 0.00 $
(0.01) $ (0.02) $ (0.01) $ (0.04) Weighted average shares
outstanding 40,086 39,771 39,259 39,930 39,138 Included in costs
and expenses above: Stock based compensation charges Cost of
revenue $ 9 $ 23 $ - $ 32 $ - Research and development 6 14 - 20 -
Sales and marketing 4 12 - 16 - General and administrative 13 28 -
41 - -------- -------- -------- -------- -------- Total $ 32 $ 77 $
- $ 109 $ - ======== ======== ======== ======== ======== *T
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