Monday, September 17, 2018 9:58:46 AM
Positive article today on Fool:
____________________________________________
Tariff Talk Sinks Applied Optoelectronics Stock Over 20%, but the Worry Is Overdone
Nicholas Rossolillo, The Motley Fool
Motley FoolSeptember 16, 2018
Shares of fiber optic networking manufacturer Applied Optoelectronics (NASDAQ: AAOI) fell as much as 25% in late August through early September on tariff worries. Comments from the White House that taxes could be imposed on virtually all goods imported into the U.S. from China sent investors scurrying for the exits, and Wall Street analyst downgrades of some of AOI's peers didn't help either. Since the company has operations in China, it could be argued that the political concerns are valid. However, AOI is in good shape, and after another stock price adjustment, shares look like a value play again.
Why some are concerned
At the beginning of September, President Trump warned he might tax another $267 billion in Chinese goods. After a couple of rounds of tariffs already imposed, that means virtually all goods imported to the U.S. from China would get hit with a tax.
Why is that bad news for Sugarland, Texas-based Applied Optoelectronics? Because AOI has three manufacturing facilities: one in Sugarland; one in Taipei, Taiwan; and a third in Ningbo, China. AOI spreads component manufacturing and different levels of its vertically integrated operations across all of its facilities, but the China factory plays a crucial role. The company explained it this way in its last annual report (emphasis is mine):
In our Sugar Land facility, we manufacture laser chips (utilizing our MBE and MOCVD process), subassemblies and components. The subassemblies are used in the manufacture of components by our other manufacturing facilities or sold to third parties as modules. We manufacture our laser chips only within our Sugar Land facility, where our laser design team is located. In our Taiwan location, we manufacture optical components, such as our butterfly lasers, which incorporate laser chips, subassemblies and components manufactured within our Sugar Land facility. In addition, in our Taiwan location, we manufacture transceivers for the internet data center, telecom, FTTH and other markets. In our China facility, we take advantage of lower labor costs and manufacture certain more labor intensive components and optical equipment systems, such as optical subassemblies and transceivers for the internet data center market, CATV transmitters (at the headend) and CATV outdoor equipment (at the node).
In addition, AOI is spending $90 million this year in capital expenditures, part of which includes a new facility in Ningbo, China, that recently broke ground and is expected to be completed in 2020. AOI doesn't say specifically how much of its manufacturing is done on mainland China, nor does it break down the specifics on the geographies in which its final product is sold. However, there is concern that any product that originates -- or has components that originate -- from China will get an extra tax, and that the extra cost will cause AOI to lose orders from its customers.
An illustration of a cloud representing a data center. Computers are arranged in a circle around the cloud, hooked up to it via the internet.
_________________________________________
https://finance.yahoo.com/news/tariff-talk-sinks-applied-optoelectronics-132100274.html
AAOI
Recent AAOI News
- Applied Optoelectronics Announces Date of First Quarter 2024 Financial Results Conference Call • GlobeNewswire Inc. • 04/18/2024 08:10:00 PM
- AOI and Credo to Showcase 400G and 800G MMF Solutions at OFC 2024 • Business Wire • 03/25/2024 01:00:00 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 03/01/2024 02:50:44 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/28/2024 09:02:11 PM
- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 02/23/2024 09:00:57 PM
- CORRECTION – Applied Optoelectronics Reports Fourth Quarter and Full Year 2023 Results • GlobeNewswire Inc. • 02/23/2024 01:52:57 AM
- Applied Optoelectronics Filed Patent Infringement Lawsuit Against CIG • GlobeNewswire Inc. • 02/22/2024 09:24:16 PM
- Applied Optoelectronics Announces Equity Grants To Employees Under Inducement Plan • GlobeNewswire Inc. • 02/22/2024 09:15:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/22/2024 09:10:36 PM
- Applied Optoelectronics Reports Fourth Quarter and Full Year 2023 Results • GlobeNewswire Inc. • 02/22/2024 09:10:00 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 11:18:28 PM
- Applied Optoelectronics Announces Date of Fourth Quarter and Full Year 2023 Financial Results Conference Call • GlobeNewswire Inc. • 02/01/2024 09:10:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/24/2024 09:02:24 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/24/2024 09:02:11 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/24/2024 09:02:01 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/24/2024 09:01:50 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/24/2024 09:01:08 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/18/2024 09:01:07 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 01/16/2024 05:35:41 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 01/09/2024 09:01:25 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 12/27/2023 09:27:17 PM
- Applied Optoelectronics' Subsidiary Global Technology Inc. Filed Patent Infringement Lawsuits Against CreaLights in China • GlobeNewswire Inc. • 12/22/2023 12:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/21/2023 09:01:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/18/2023 11:21:16 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 12/14/2023 10:32:11 PM
Bantec Reports an Over 50 Percent Increase in Sales and Profits in Q1 2024 from Q1 2023 • BANT • Apr 25, 2024 10:00 AM
Cannabix's Breath Logix Alcohol Device Delivers Positive Impact to Private Monitoring Agency in Montana, USA • BLO • Apr 25, 2024 8:52 AM
Kona Gold Beverages, Inc. Announces Name Change to NuVibe, Inc. and Initiation of Ticker Symbol Application Process • KGKG • Apr 25, 2024 8:30 AM
Axis Technologies Group and Carbonis Forge Ahead with New Digital Carbon Credit Technology • AXTG • Apr 24, 2024 3:00 AM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM