Saul & Saulites,

ZACK’S just issued a ‘strong sell’ for AFOP. I don’t have subscription/access to those reports. I kept my small position, bought early and low, it is still healthily positive. However, knowing Saul ‘abandoned ship’ (no pejorative connotation, but rather due respect to the one holding the rank of “Admiral”) and reading this headline makes me want to revisit now. Anybody out there with access? News? Specifics? I have only just begun to review. I figure I can’t better research done than by checking in with my Fellow Fools.

Let me know if you know,


I sold most of my AFOP. I traded a bunch in for SWKS the reason for which I posted on a couple of weeks ago. I still have a 1.3% position and I’ve been selling covered calls ($15, one month out) against this position. I plan on continuing to do this or just sell my entire position at some point.

I think that the danger for a huge drop in the stock price is small because the valuation is still cheap. The biggest risk is their concentration in their 35% customer (Google???).



Options are foreign to me and outside my strike zone. I don’t think I will ever swing on one those pitches, no matter how fat.

I don’t see a huge drop in the offing either. If there was one, I would probably consider it a buying op more than a sell rec.

AFOP did report 25%+ YOY revenue increase last quarter. Yes, they are concentrated. I think they have bigger revenues and EPS ahead of them as I look out 2-3 years. Therefore, I think I still have gains ahead of me.

I guess I am thinking along the lines of what you state you did, buying something else with the potential of even greater returns.


ZACK’S just issued a ‘strong sell’ for AFOP.

Hi KL, Zacks recommendation ranks or ratings are based entirely on whether analysts are raising or lowering their estimates (and possibly also if the company beats or misses estimates).

This means that if an analyst previously thought revenue was going to be up next quarter by 30%, and now lowered his estimate to just up 25%, even though it’s still UP 25%, it’s a reduction in his estimate so it counts toward a sell rating.

It’s just the way Zacks does things.

I explained why I sold out gradually. For their last quarter they predicted revenues “above $25 million” “with no upper limit”, but came in at $24.2. This was up 27% from the year before, but was still a considerable disappointment. It was actually down 3% sequentially. They should have pre-announced.

In the Conference Call they said something like this: Although our second quarter revenues fell short of our previous guidance, due to lower than expected demand from one key customer… we are encouraged by increased sales to our telecom customers and European customers.

Regarding forward guidance, we expect revenues in the third quarter to be flat with the second quarter. Despite flat revenues in these three quarters, we continue being encouraged by the prospect of emerging business growth in the coming years.

We experienced a slowdown in orders from our largest customer in the last month of the second quarter. This resulted in a shortfall of revenue from the guidance given in the previous conference call. Our understanding is that this slowing was temporary and we have seen a return to a more regular order pattern from the customer recently.

It was way too vague and uncertain and I had surer places to put my money.


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Options are foreign to me and outside my strike zone. I don’t think I will ever swing on one those pitches, no matter how fat.


My point was that I do plan on selling the rest of my AFOP. However, since I believe that the downside is limited and that the valuation is reasonable, I am using options to squeeze a bit of a higher price from my remaining shares.


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The problem is there was no growth during the last 3 quarters and they projected next quarter will be flat. But with the P/E this low, any surprise for the upside should cause the stock to rebound. I am willing to give it another quarter or two given that I added this stock less than 6 months ago. I bought some in the low 13, so I am ahead on those, but losing money over all on AFOP.

Here are their last 3 quarters
Rev / EPS
24.8 / .35
24.2 / .34
24.2 / .35
Next quarter is about the same
24 / .35

Yes, TTM growth is 20%, but that will change if this quarter is indeed flat.


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