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Why Sonus Networks, Inc. Stock Jumped on Friday

By Daniel Sparks – Updated Oct 13, 2017 at 12:32PM

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Here's how Sonus' third quarter was stronger than expected.

What happened

Shares of network communications and network security company Sonus (RBBN -1.58%) rose as much as 12.3% on Friday after the company released preliminary results for its third quarter. The stock is up 5.5% as of 12:15 EDT.

The stock's move likely reflects the company's significant outperformance relative to its guidance for the quarter. Preliminary revenue and non-GAAP earnings per share (EPS) were $74.5 million and between $0.25 and $0.26, respectively. Management had guided for revenue to be in the range of $70 million to $72 million and non-GAAP EPS to be between $0.17 and $0.20.

A stock chart showing a stock price moving higher

Image source: Getty Images.

So what

Sonus CEO Raymond Dolan credited its strong third quarter to hitting some "major milestones for a large competitive displacement in North America" and a higher gross margin driven by strength in its software solutions.

Now what

For the full year, Sonus had previously guided for revenue to be from flat to a low single-digit percentage decline compared to 2016. But in Sonus' preliminary third quarter, the company said it now expects full-year results to be in line with the high end of the guidance range it previously provided. In other words, Sonus now expects full-year 2017 revenue to be flat compared to 2016.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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