Why Fusion-io, Inc. Shares Soared

Is Fusion-IO's jump meaingful? Or just another movement?

Jan 23, 2014 at 5:36PM

What: Shares of Fusion-io, (NYSE:FIO) jumped more than 13% Thursday after the company exceeded expectations with its fiscal second-quarter report.

So what: Quarterly revenue came in at $94.5 million, with adjusted gross and operating margins of 57.6% and negative 11.4%, respectively. That translated to an adjusted net loss of $0.06 per diluted share. By contrast, analysts were expecting a wider $0.10 per share loss on sales of just $89.43 million.

Going forward, Fusion-io also effectively repeated last quarter's cautious approach to guidance, calling for fiscal third-quarter revenue to be "in-line to slightly up sequentially." Moreover, the company stated that gross margin should be roughly 51% to 53%, while non-GAAP operating margin will deteriorate to a range of negative 15% to 20%.

Now what: However, I'm inclined to take its latest guidance with a grain of salt after noting this quarter's results significantly differed from the company's own projections -- this time for the better. Still, today's jump is understandable considering that, even after the pop, shares of Fusion-io currently sit around 18% lower than their levels just three months ago. In the end, though, given Fusion-io's lack of profits and expected near-term absence of significant top-line growth, I prefer to stay on the sidelines for now.

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Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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