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 several of the leading optical networking equipment makers fell sharply after Oclaro (Nasdaq: OCLR ) said it experienced a "slowdown" in revenue growth last month.
So What: Oclaro, already off 15% from last week's Infinera (Nasdaq: INFN ) meltdown, fell more than 40% after the warning and the weak fiscal first-quarter results it posted. Adjusted earnings of $0.06 per share fell far short of the $0.22 analysts were expecting, according to a report from Indie Research.
Now What: Judging by the size and intensity of the sell-off, investors believe optical networking is doomed. Oclaro and Infinera peers Oplink Communications (Nasdaq: OPLK ) and JDS Uniphase (Nasdaq: JDSU ) fell 13% and 10%, respectively, in intraday trading while Finisar (Nasdaq: FNSR ) suffered a 10% haircut before recovering to down just 6%.
All four fire sales are probably a mistake. Judging from Akamai's (Nasdaq: AKAM ) impressive third-quarter results, consumers and businesses are using the web as much as ever, and it's impossible to meet the infrastructure needs of the modern Internet without optical components. Don't be afraid to go bargain-shopping at these levels.