Why Ixia Shares Slumped

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 Internet specialist Ixia (NASDAQ: XXIA  ) were getting booted out of investors' portfolios today, falling as much as 13% after a disappointing earnings report.

So what: Ixia's numbers were actually pretty strong on the surface, as revenue was up 43%, though all of that growth came from acquisitions. Without the addition of Anue Systems and BreakingPoint Systems last year, sales actually declined 2%. Adjusted earnings per share also beat estimates by $0.03, coming in at $0.25.

Now what: The market seems to be punishing Ixia for the drop in organic revenue, and management admitted to seeing a slowdown from some equipment manufacturer deals. Still, the company expects growth in its core business to increase 7% sequentially in the current quarter, and the stronger-than-expected growth from its acquisition should also not be overlooked. Given the growth potential there, Ixia looks like it should be able to bounce back.

Don't miss the next update on Ixia. Add the company to your Watchlist here.


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