Light Reading
Activist investors hound Oplink, while Alliance Fiber Optics Products critics worry about too much revenue coming from just one source.

Bit Parts: Investors Hound Oplink

Dan O'Shea
8/15/2014
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The optical components sector always seems to have more than its share of corporate and financial drama. Here's an update on a few recent happenings.

  • Oplink Communications Inc. (Nasdaq: OPLK)'s corporate governors continue to face pressure from activist shareholders desiring board representation and a sale of the optical components firm's non-core Oplink Connected business. The latest salvo from those investors -- Engaged Capital and Voce Capital Management, who have now dubbed themselves Oplink Shareholders for Change (OSC) -- is a statement calling on Oplink's board to "suspend its strategic decision-making process until the reconstitution of the Board at the upcoming annual meeting of shareholders."

    Why would investors seeking change want the current board to sit on its hands? Because Oplink already has indicated it is planning to add members to its board, and the OSC participants also have nominated their own choices for new board membership. OSC doesn't want the current Oplink board making a decision about Oplink Connected business that it wouldn't support. Oplink currently is reviewing strategic alternatives for the unit, including a sale, but also a shutdown, and already has moved to classify the business as discontinued operations. (See Oplink Answers Activist Investors.)

  • Alliance Fiber Optic Products Inc. (Nasdaq: AFOP) recently reported a 27% jump in revenue for the second quarter, compared to the same quarter a year before. But critics -- exemplified by this Seeking Alpha post -- have been concerned that the company is too reliant on its biggest customer, believed to be Google, which has been responsible for as much as 35% of the company’s revenue. The poster also calls into question company officials’ lack of candor regarding executive compensation and insider selling.

  • Oclaro Inc. (Nasdaq: OCLR) just reported its own unit sale, saying it sold its industrial and consumer product businesses in Japan to a Japanese semiconductor company for roughly $18.5 million in cash. The company also reported a net loss for the fiscal fourth quarter of $24 million, compared with a net loss of $22.9 million the year-ago period. That news comes not long after Oclaro impressed the sector with the hiring of former Cisco Systems Inc. (Nasdaq: CSCO) executive Adam Carter. (See Get Carter: Oclaro Did, From Cisco)

— Dan O'Shea, Managing Editor, Light Reading

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