Darspal S Mann
Long/short equity, growth at reasonable price, special situations, deep value

Alliance Fiber Optic: One Customer Driven Growth Seem Over For Now

For the last few quarters, Alliance Fiber Optic Products Inc. (NASDAQ:AFOP) has been able to grow revenues close to 50-100%, ignoring seasonality and industry slowdown, but that streak seems to be coming to an end. Declining sequential growth, losing growth momentum at its largest customer and increase in tax rates may just be the beginning; margin pressure and earnings decline may follow soon.

The market for fiber optic equipment in general is limping back, at best, but the demand is heavily skewed in favor of a few equipment players, who have the right technical knowledge & background to win designs at the customers that are expanding aggressively. Investors may be well served, especially after looking at this quarter's

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