October 21, 2011
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 communications equipment maker Acme Packet (Nasdaq: APKT ) plunged 17% Friday after its quarterly results came in below Wall Street expectations.
So what: While Acme's third-quarter profit didn't miss by much ($0.21 per share versus the consensus of $0.22), a disappointing top line ($70.6 million versus estimates of $74.6 million) is prompting investors to continue lowering their growth expectations. In fact, the stock is hitting a new 52-week low on the news and is down a whopping 60% over the past six months.
Now what: Mr. Market seems to be overreacting a tad. The quarter wasn't great, but management did reaffirm its full-year outlook, suggesting that the short term isn't as horrific as today's near-20% sell-off suggests. And while gorillas Cisco (Nasdaq: CSCO ) and Juniper (NYSE: JNPR ) have done a nice job in integrating SBC (session border controller) functionality into their routers, Acme continues to be the big dog in the space with more than 60% of the market. In other words, Acme's big picture still looks decent.
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