October 19, 2010
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Motley Fool Rule Breakers pick Infinera (Nasdaq: INFN ) , an optical networking specialist, fell more than 30% in intraday trading after the company predicted weak fourth-quarter results.
So what: In a conference call following the earnings report, Infinera Chief Financial Officer Ita Brennan warned that Level 3 Communications (Nasdaq: LVLT ) wouldn't contribute as much to Q4 revenue as it did in Q3, when it accounted for 19% of sales. Global Crossing (Nasdaq: GLBC ) was the only other customer to account for at least 10% of revenue. Brennan also cited a lack of visibility into the timing of deals in waxing cautious about Infinera's fourth-quarter outlook.
Now what: It's tough to blame investors for selling when they've waited long, painful years for Infinera to pay off. Now, Brennan is asking them to be just a little more patient. I can see the argument: Big deals are hard to time and even harder to predict. I'd wait for further clarity on the health of the sales pipeline before buying more or opening a new position.
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