What happened
Extreme Networks (EXTR 1.61%) reported fourth-quarter results on Monday night, blowing Wall Street's estimates out of the water. In response, the enterprise networking expert's shares jumped as much as 14.7% higher in Tuesday's early trading before settling down to a 10.1% gain at 11:15 a.m. EDT.
So what
Sales rose 28% year over year, landing at $179 million. Adjusted earnings per share more than doubled from $0.07 to $0.17. Analysts would have settled for earnings of $0.07 per share on sales near $172 million.
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Now what
Extreme Networks' strong fourth-quarter sales rested on solid organic growth in the company's core switching equipment sales. Gross margins expanded thanks to "disciplined" pricing policies. Together, these trends added up to a stellar bottom-line performance.
Looking ahead, Extreme just closed one large acquisition and is preparing for the final John Hancocks on another one. Already the third-largest network company in the equipment sector, Extreme is building its economies of scale via a combination of plug-in buyouts and solid execution in the core business.
Share prices have more than doubled year to date, including today's sudden surge. Extreme Networks is on a roll, and investors are bidding up its stock prices for all the right reasons.
