Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Sonus Networks Soared Today

By Timothy Green - Apr 26, 2017 at 5:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

While revenue slumped during the first quarter, the company performed better than analysts were expecting.

What happened

Shares of communications service provider Sonus Networks (RBBN -2.74%) jumped on Wednesday after the company reported its first-quarter results. Sonus beat analyst estimates for both revenue and earnings, leading investors to push the stock up 16%.

So what

Sonus reported first-quarter revenue of $53.4 million, down 9.8% year over year but about $1.3 million higher than the average analyst estimate. Product revenue fell 27% to $25.4 million, but service revenue rose nearly 15% to $28 million.

A Sonus Networks session border controller.

Image source: Sonus Networks.

Non-GAAP EPS came in at a loss of $0.09, down from a gain of $0.03 during the prior-year period. Analysts were expecting a bigger loss of $0.13 per share. Lower revenue and higher research and development costs drove down the bottom line compared to the first quarter of 2016.

Sonus President and CEO Ray Dolan pointed to new products launched during the first quarter and key customer wins for the company's better-than-expected performance. He took a dig at Sonus' rivals: "Unlike many of our competitors, Sonus Networks is investing in the real-time communications security market, catering to both service providers and enterprises. We believe that this focus will result in a unique security offering, which leverages our deep experience in SIP."

Now what

Sonus expects to produce around $107 million of revenue during the first half of 2017, with $54 million coming during the second quarter. On a non-GAAP basis, Sonus expects to post a net loss of $0.10 per share during the second quarter.

For the full year, Sonus believes that revenue will be flat to up by a low-single-digit percentage compared to 2016, implying that business will pick up in the second half, counteracting a weak first half.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ribbon Communications Inc. Stock Quote
Ribbon Communications Inc.
RBBN
$2.84 (-2.74%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
321%
 
S&P 500 Returns
111%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.