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May 2017
#1

This should put some minds at ease:

Looking at China optical communications revenue, we are now modeling a decline of 15% q/q (down $9 million from $59 million) in the March quarter and a decline of 30% q/q (down $15 million) in the June quarter as inventory corrects in response to delayed tender releases. We continue to expect a ramp in the September and December quarters, modeling a sequential increase of 14% and 13% respectively in Chinese optical communications revenue.

Finisar, Lumentum: Stifel Cuts Targets Amidst China Optical Slowdown - Tech Trader Daily - Barrons.com

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#2

Keep an eye on this:

What may be shaping up as China’s most concerted effort yet to bring its credit boom under control is spurring investors to gauge any contagion to broader financial markets, a-la 2015, when Chinese turmoil caused global ructions. Policy makers’ moves to crack down on leverage have already wreaked about $500 billion of financial damage domestically, and -- along with evidence economic growth may be peaking -- are dragging on industrial metals and iron-ore prices globally. The key metrics to watch now: the yuan’s exchange rate and cross-border capital flows.

China's Deleveraging Pain Puts Investors on Alert for Contagion - Bloomberg

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#3

We've bought 500 shares Applied Opto (AAOI) at $68.40

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#4

We should have bought AAOI way sooner but kept eye off the ball writing, even on AAOI itself (see here, when it was a lot cheaper)

Shares of fiber-optic component supplier Applied Optoelectronics (AAOI) are up $5.85, or 9%, at $69.39, after Needham & Co.’s Alex Henderson this morning starts coverage of the stock with a Strong Buy rating, and an $85 price target, writing that the company may have “substantial upside” to Street estimates, as the data center field moves from 25-gigabit-per-second parts to 100-gigabit. “AAOI looks like the market share leader and lower cost supplier,” observes Henderson. "We expect very strong demand growth over the next several years as the Web 2.0 Big Data, Social Media and IaaS companies drive efficiencies through their current and new scaled-out Data Center footprints." Henderson’s own estimates are not wildly different from the Street consensus. His estimates for this year stand at $448.4 million in revenue and $4.60 per share in earnings. That compares to $444.8 million and $4.66 consensus, according to FactSet. For next year, he sees $527.8 million and $5.03 per share, compared to the average estimate for $523 million and $5.04.

Applied Opto Surges: Street Too ‘Timid’ About Them, Says Needham - Barron's

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#5

And the optical networker stocks can recover more on the back of a recovery in Chinese demand:

The update shouldn't come as a complete surprise. Last Wednesday, Rosenblatt analyst Jun Zhang initiated coverage on Oclaro with a buy rating and $12-per-share price target -- a hefty premium to Oclaro's current price of $9.37 per share. "We believe that China Mobile's Phase 12 60T procurement and China Telecom's Metro upgrade are likely to begin in June and September/October, respectively, which should help reignite industry demand and push OCLR back to its normal revenue levels by the end of this year," Zhang explained at the time. "We believe China's optical demand can resume its growth in 2018 with more metro-level upgrades."

Why Optical Communications Stocks Popped on Monday -- The Motley Fool

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#6

We're buying 500 shares in Acacia Networks (ACIA) at $47.65

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#7
Needham & Company analyst, Alex Henderson, reiterated his Buy rating on shares of Acacia Communications (NASDAQ: ACIA) and came away feeling upbeat on the company's prospects after hosting the company on a multi city non deal roadshow. Management was upbeat on the outlook for CY2H and CY18 and the analyst was reminded of the new product development strength. Management has not seen a meaningful change in China, "run-rate" demand and some smaller regional contracts appear to be working through inventory and setting up for the CY2H recovery. Additionally, management is still seeing strong demand in the DCI segment as well as in Metro Core outside of China. Net: at 14x EV/E on CY18 EPS, the analyst thinks ACIA looks oversold. No change to the price target of $65.

Acacia Communications (ACIA): Notes From The Road - Needham

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