Acacia Communications' shares rise after Trump signals end to Chinese firm's sanctions
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The Maynard headquarters of Acacia Communications at Mill & Main.
Shares of Maynard-based communications equipment manufacturer Acacia Communications opened nearly $6 higher Monday after President Donald Trump indicated that he wants to resume doing business with a Chinese telecommunications giant.
In a Sunday morning tweet, Trump said he has instructed the U.S. Department of Commerce to bring ZTE Corp. back into U.S. commerce.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” he wrote. “Too many jobs in China lost. Commerce Department has been instructed to get it done!”
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
Last week, Acacia said it’s scaling back its second-quarter revenue projections due to the sanctions, expecting a $7 million to $13 million dip from its first-quarter numbers.
ZTE was sanctioned in April, hit with a seven-year ban on exporting American products after the Department of Commerce determined that the company failed to live up to a March 2017 agreement.
The 2017 agreement had ZTE paying a civil and criminal penalty and forfeiture of nearly $1.2 billion after illegally shipping telecommunications equipment to Iran and North Korea, making false statements, and obstructing justice, including through preventing disclosure to and affirmatively misleading the U.S. government.
The company agreed to the seven-year ban if it violated any terms of the agreement. The Department of Commerce said last month ZTE made false statements to the department's Bureau of Industry and Security in 2016, during settlement negotiations and last year related to disciplinary actions it said it took against senior employees.
According to the department, ZTE actually paid full bonuses to employees that had engaged in illegal conduct.
Stock of Acacia, which does business with ZTE, plunged from about $40 per share to $25.51 after news of the ban last month.
"Although the denial order will have an adverse impact on our business for the foreseeable future, we are prioritizing several initiatives and opportunities that we believe will help mitigate that impact," Acacia President and CEO Raj Shanmugaraj said in a press release last week.
The company did not immediately comment on the matter Monday.
The stock price opened Monday at $37.18 per share after it closed at $31.64 Friday.
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