AFOP Reports 1st Quarter 2009 Results

Revenues for the first quarter of 2009 totaled $7,643,000, a 19% decrease from revenues of $9,401,000 recorded in the first quarter of 2008 and 7% decrease compared with revenues of $8,201,000 for the fourth quarter of 2008. The Company recorded net income for the first quarter of 2009 of $302,000. This compares to net income for the fourth quarter of 2008 of $820,000 and $820,000 for the first quarter of 2008.

Included in expenses for the quarter ended March 31, 2009 was $28,000 of stock-based compensation charges under FAS 123(R). Included in expenses for the quarter ended March 31, 2008 and the fourth quarter of 2008 were $51,000 and $30,000 of stock-based compensation charges under SFAS 123(R), respectively.

Peter Chang, President and Chief Executive Officer, commented, "Despite our revenue decrease in the first quarter reflecting overall economic conditions, we are pleased with our financial performance. We generated quarterly profits over the last twelve quarters and maintained gross margins at or above 30%, while reducing inventory in the quarter ending March 31, 2009."

"In addition, we gained new customers and new design wins during the quarter. Based on input from our customers and current backlog, we expect that revenues in the second quarter of 2009 will grow sequentially, instead of declining. With higher revenues in the coming quarter, we expect our gross margin will improve and profits will increase as well," concluded Mr. Chang.

Conference Call

Management will host a conference call at 1:30 p.m. Pacific Time on April 22, 2009 to discuss AFOP's first quarter 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 319964. AFOP will also provide a live webcast of its first quarter 2009 conference call at AFOP's website: www.afop.com. An audio replay will be available until May 1, 2009. The dial in for the replay is 877-660-6853. The replay pass-codes (account # 286; conference ID#: 319964) 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 DWDM components and modules, fixed and variable optical attenuators, and depolarizers. 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.

Except for the historical information contained herein, the matters set forth in this press release, including statements as to future market demand, and our expectations regarding second quarter 2009 results, including our expectations regarding our second quarter 2009 revenues, gross margin and profits, and the basis for our expectations, are forward looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including, but not limited to, general economic conditions and trends, the impact of competitive products and pricing, timely introduction of new technologies, timely design acceptance by our customers, the acceptance of new products and technologies by our customers, order trends and customer demand, the timing of customer orders, loss of key customers, ability to ramp new products into volume production, industry-wide shifts in supply and demand for optical components and modules, industry overcapacity, failure of cost control initiatives, financial stability in foreign markets, and other risks detailed from time to time in our SEC reports, including AFOP's quarterly report on Form 10-K for the year ended December 31, 2008. These forward-looking statements speak only as of the date hereof. AFOP disclaims any intention or obligation to update or revise any forward-looking statements.

ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Balance Sheets
(in thousands)
                                                               Mar. 31,      Dec. 31,
                                                               2009          2008
                                                               (Unaudited)
ASSETS
Current assets:
                   Cash and short-term investments             $     23,402  $    23,954
                   Accounts receivable                               5,167        4,708
                   Inventories                                       4,968        5,614
                   Other current assets                              492          379
                   Total current assets                              34,029       34,655
Long-term investments                                                14,483       13,718
Other asset - ARS Right                                              1,817        2,582
Property and equipment, net                                          4,357        4,653
Other assets                                                         179          190
                   Total assets                                $     54,865  $    55,798
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
                   Accounts payable                            $     3,410   $    3,572
                   Accrued expenses and other liabilities            2,683        3,374
                   Total current liabilities                         6,093        6,946
Long-term liability                                                  828          891
                   Total liabilities                                 6,921        7,837
Stockholders' equity                                                 47,944       47,961
                   Total liabilities and stockholders' equity  $     54,865  $    55,798

ALLIANCE FIBER OPTIC PRODUCTS, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                               Three Months Ended
                                               Mar. 31,     Dec. 31,     Mar. 31,
                                               2009         2008         2008
Revenues                                       $    7,643   $    8,201   $    9,401
Cost of revenues                                    5,345        5,662        6,455
                   Gross profit                     2,298        2,539        2,946
Operating expenses:
                   Research and development         729          645          898
                   Sales and marketing              634          485          668
                   General and administrative       845          812          894
                   Total operating expenses         2,208        1,942        2,460
Income from operations                              90           597          486
Interest and other income, net                      222          319          396
Net income before tax                               312          916          882
Income tax                                          10           96           62
Net income                                     $    302     $    820     $    820
Net income per share:
                   Basic                       $    0.01    $    0.02    $    0.02
                   Diluted                     $    0.01    $    0.02    $    0.02
Shares used in per share calculation:
                   Basic                            41,872       41,796       41,392
                   Diluted                          41,897       41,827       44,423
Included in costs and expenses above:
Stock based compensation charges
                   Cost of revenue             $    14      $    15      $    22
                   Research and development         6            6            10
                   Sales and marketing              4            4            7
                   General and administrative       4            5            12
                   Total                       $    28      $    30      $    51

SOURCE: Alliance Fiber Optic Products, Inc.

Alliance Fiber Optic Products, Inc. 
Anita Ho, 408-736-6900 x168 
Acting Chief Financial Officer