Acacia Communications (NASDAQ: ACIA) is on the move again and not in a good way. On July 14, the company preannounced preliminary second-quarter earnings. They are not pretty numbers.
Acacia expects revenue in the range of $77-$79 million. Expectations of $91.3 million demonstrate ACIA is far off from recovering. It expects earnings of $0.17 - $0.20 per share, compared to the expected $0.32 per share. Acacia cited a quality issue in a circuit board cleaning process. The problem is odd and is a wake-up call to shareholders that the small company has some growing up to do.
Applied Optoelectronics (NASDAQ: AAOI) is an alternative investment to ACIA. It is a vertically integrated fiber optics company that does not depend on one customer like ACIA. ACIA is depending too much on a single Chinese customer for its business.
CIENA (NYSE: CIEN) is another optical networking company investors should consider.
Despite the headwinds for Acacia, William Blair rated the stock as an ‘outperform.’ It expects demand from data center will spur sales of optical interconnect products. Beware of this rating: the optimistic rating has been wrong since last year when the stock traded in the $60’s to $70’s. ACIA stock closed at $39 on July 14.
