AFOP Reports Annual Results – 2009 Ends with Improved 4th Quarter

Alliance Fiber Optic Products, Inc. (Nasdaq: AFOP), an innovative supplier of fiber optic components, subsystems and integrated modules for the optical network equipment market, today reported its financial results for the fourth quarter and year ended December 31, 2009.

Revenues for the fourth quarter of 2009 totaled $7,517,000, an 8% increase from revenues of $6,951,000 reported in the previous quarter, and are lower than the revenues of $8,201,000 reported in the fourth quarter of 2008. The Company recorded net income for the fourth quarter of 2009 of $428,000, or $0.01 per share based on 42.2 million shares outstanding, compared to $271,000, or $0.01 per share based on 42.0 million shares outstanding, for the third quarter of 2009. This compares to net income for the fourth quarter of 2008 $820,000, or $0.02 per share based on 41.8 million shares outstanding.

Revenues for fiscal year 2009 were $29,834,000, compared with the revenues of $38,754,000 in fiscal year 2008. The Company recorded a net profit for fiscal year 2009 of $ 1,433,000 or $0.03 per share based on 42.0 million shares outstanding. This compared with a net profit of $4,066,000 or $0.10 per share for the previous year. On an annual operating income basis, the Company generated $751,000 in fiscal year 2009.

Included in expenses for the quarter ended December 31, 2009 was $33,000 of stock-based compensation charges under SFAS 123(R), compared to $30,000 of stock-based compensation charges for the quarter ended December 31, 2008. Included in expenses for the year ended December 31, 2009 was $112,000 of stock-based compensation charges under SFAS 123(R), compared to $161,000 of stock-based compensation charges for the year ended December 31, 2008.

Peter Chang, President and Chief Executive Officer, commented, “We persevered through a challenging 2009 and ended with sequential growth in the fourth quarter. Despite our year over year revenue decline, we were pleased that we are able to manage each quarter in 2009 with positive operating profits and positive net profits through our continued progress in technology and manufacturing excellence.”

“Our balance sheet was strong in 2009. At the end of 2009, inventory improved from the previous year and most importantly, our cash and short-term investments, together with our ARS Right, increased to $42.2 million.”

“We are proud of our achievements in a difficult year, and we enter this next decade with confidence as we are financially sound, are experiencing increasing interest in our expanding product portfolio, and are growing our base of customers throughout the world. We expect that revenues for the coming quarter will continue the recent sequential growth pattern. Additionally, with our continued focus on operational efficiencies, we expect to generate profits from operations in the coming quarters of 2010, while continuing to invest in growth opportunities for our business.” concluded Mr. Chang.

Conference Call

Management will host a conference call at 1:30 p.m. Pacific Time on January 28, 2010 to discuss AFOP’s fourth quarter and fiscal year 2009 financial results. To participate in AFOP’s conference call, please call 877-407-9210 at least ten minutes prior to the call in order for the operator to connect you. The confirmation number for the call is 341735. AFOP will also provide a live webcast of its fourth quarter and fiscal year 2009 conference call at AFOP’s website www.afop.com . An audio replay will be available until February 11, 2010. The dial in number for the replay is 877-660-6853 or 201-612-7415. The replay passcodes (account # 286; conference ID#: 341735) are both required for the replay.

About AFOP

Founded in 1995, Alliance Fiber Optic Products, Inc. designs, manufactures and markets a broad range of high performance fiber optic components and integrated modules. AFOP’s products are used by leading and emerging communications equipment manufacturers to deliver optical networking systems to the long-haul, enterprise, metropolitan and last mile access segments of the communications network. AFOP offers a broad product line of passive optical components including interconnect systems, couplers and splitters, thin film CWDM and DWDM components and modules, optical attenuators, and micro-optics devices. AFOP is headquartered in Sunnyvale, California, with manufacturing and product development capabilities in the United States, Taiwan and China. AFOP’s website is located at http://www.afop.com .