What happened

In response to the company reporting pleasant fourth-quarter results that featured bullish guidance, shares of Infinera (NASDAQ:INFN), a telecommunications equipment provider, rose 29% as of 3:25 p.m. EST on Thursday.

So what

Here's a review of the headline numbers from the fourth quarter:

  • Revenue jumped 8% to $195.8 million. That was above the high end of management's guidance range and far surpassed Wall Street's estimate.
  • Non-GAAP (generally accepted accounting principles) net loss was $18.6 million, or $0.12 per share. That also compared favorably to market-watchers' expectations of a $0.13 loss.

On the call with investors, CEO Tom Fallon credited the revenue beat to strong adoption of the company's next-generation ICE4 ("Infinite Capacity Engine 4") product line. Combining this with other favorable industry dynamics, management shared the following guidance for the upcoming quarter:

  • Revenue of $195 million to $205 million
  • A non-GAAP loss per share of $0.09 to $0.13

By contrast, Wall Street was only expecting $180 million in revenue and a net loss of $0.16 per share.

What's more, Infinera's CFO Brad Feller stated that he expects gross margins to improve throughout the year. He also said that double-digit revenue growth isn't out of the question.

Given the better-than-expected results and bullish guidance, it isn't hard to figure out why shares are flying high today.


Image source: Getty Images.

Now what

2017 was a rotten year for Infinera, so it is great to see the company projecting confidence about its near-term future. A part of that optimism likely stems from the news that internet streaming giant Netflix (NASDAQ:NFLX) has chosen to deploy Infinera's products to enhance its streaming capacity. Securing a high-end customer like Netflix should give investors confidence that Infinera finally has a product portfolio that will allow it to attract and retain new customers.

On the other hand, Infinera is still operating at a loss, and is expected to continue doing so for the next few quarters. Given the company's up-and-down history, I, for one, have no plans to chase this stock after today's monster move.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.