Applied Optoelectronics, Inc.

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Case Summary

Company Name
Applied Optoelectronics, Inc.
Stock Symbol
Class Period
August 7, 2018 to September 27, 2018
Motion Deadline
November 30, 2018
Southern District of Texas

The complaint charges Applied Optoelectronics and certain of its officers with violations of the Securities Exchange Act of 1934.  Applied Optoelectronics to designs and manufactures fiber-optic networking products, primarily for four networking end-markets: internet data center, cable television, telecommunications, and fiber-to-the-home.

The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations, and prospects, including that certain of the Company’s lasers were susceptible to premature failure, which would materially affect certain of the Company’s transceivers utilizing these lasers.  As a result of defendants’ false statements and/or omissions, Applied Optoelectronics securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of close to $42 per share.

On September 27, 2018, Loop Capital Markets downgraded the Company’s stock from Hold to Sell, stating that Applied Optoelectronics was experiencing product quality issues with its 100G CWDM4 transceivers in which its lasers fail after thousands of hours of operation, and quality concerns could result in market share loss.  Then on September 28, 2018, the Company issued an update to its third quarter 2018 revenue guidance in which it reduced its guidance from $82-$92 million to $55-$58 million.  The Company stated that it had “identified an issue with a small percentage of 25G lasers within a specific customer environment” and it had “mutually agreed with the customer to temporarily suspend shipments of certain transceivers utilizing these lasers while [they] worked to gain a deeper understanding of the scope of the issue and implement a solution.”  On this news, the Company’s share price fell more than 13% to close at $24.66 per share on September 28, 2018.

Class Period: August 7, 2018 - September 27, 2018
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