The AC400 line of products specifically support transmission capabilities ranging from 100 to 400 Gbps per module. It is especially suited for the requirements of metro, long-haul, and sub-sea networks. During its last earnings conference call on May 9, ACIA commented that demand has been strong for this particular module. For example, one of the largest sub-sea network network providers recently qualified its flex-rate AC400 product -- the second tier one sub-sea network provider to do so.
Furthermore, management stated that it expects growth in 2H17 to be driven by sales of its flex-rate AC400G and CFP products, as well as its newer CFP2-DCO and CFP2-ACO products. As for the CFP (C-form factor pluggable) products, they support 100 Gbps transmission speeds, optimized for power-sensitive applications. They are widely adopted in metro carrier and inter-data center applications.
Given ACIA's commentary during the last earnings call regarding these specific products, it would seem that a temporary set-back in the production of this product could be material, at least in the short-term. At this time, however, it does not have a cost estimate for the remediation efforts. It is also still working to assess how this will affect its manufacturing capacity in the near-term. Therefore, it's very difficult determine the precise financial consequences as it relates to Q2 and 2H17.
The news does not come at a great time for ACIA, though. The stock has suffered a precipitous decline from its post-IPO highs of around $130 last September, to the low & mid $40s, where it has been trading for the past month. A break below $40 could send the stock careening towards its IPO opening price of $29, which was more than a year ago.
With that said, this is only a temporary issue, and doesn't speak to the underlying drivers of its business. ACIA seemed bullish about its prospects due to strength in the 100G-plus market, and, due to new product introductions and launches in 2H17.