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 Finisar (NASDAQ: FNSR), a designer of optical subsystems and fiber-optic components, popped as much as 13% after the company reported better-than-expected fourth-quarter results.
So what: For the quarter, Finisar saw a rebound in 10G and 100G Ethernet receivers and transponders which helped boost revenue by 2% to $243.4 million as adjusted-EPS came in at $0.20. Comparatively, Wall Street had only been expecting a profit of $0.17 per share on $242.6 million in sales. The real boost came from Finisar's forward guidance, which calls for $245 million to $260 million in sales and $0.22-$0.26 in EPS in the first quarter. Wall Street had only been forecasting $0.19 in EPS and $248.9 million in revenue.
Now what: We are seeing this surge across the board in the fiber-optic sector. Between AT&T pledging to spend $14 billion in wireless infrastructure upgrades over a three-year period last year, and Sprint-Nextel expected to use a good chunk of SoftBank's majority stake cash to expand its 4G LTE network, we knew that it was only a matter of time before we saw a trickle-down effect to fiber-optic providers. There is still room to run for these remarkably cheap fiber-optic companies, including Finisar, and I wouldn't be surprised if the trickle-down effect soon began to spread to other networking equipment suppliers.
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