Why Extreme Networks Inc. Shares Plunged

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 network equipment technologist Extreme Networks Inc.  (NASDAQ: EXTR  ) plummeted 16% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has soared over the past year on better-than-expected growth, but today's Q2 results -- adjusted EPS of $0.14 on revenue of $148.3 million versus the consensus of $0.13 and $151.6 million -- coupled with downbeat guidance is forcing investors to quickly sober up. While the company continues to grow its top line at a breakneck pace (98% year over year), Mr. Market's reaction suggests that it isn't growing fast enough to justify its massive run in 2013.

Now what: Management now sees adjusted Q3 EPS of $0.01-$0.06 on revenue of $140-$155 million, versus the consensus of $0.08 and $152.6 million. "Our integration plans are on track," Extreme Networks CEO Chuck Berger said in reference to its recent purchase of Enterasys. "The senior management team for the combined Company has been established and announced and we continue to make steady progress toward a complete integration." So, while Extreme Networks might still be too speculative for average investors, its suddenly beaten-down stock and rock-solid balance sheet might provide enough downside protection for more enterprising Fools.

A more compelling tech pick?
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2824931, ~/Articles/ArticleHandler.aspx, 4/20/2014 12:31:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement