What happened

Shares of Infinera Corporation (NASDAQ:INFN) skyrocketed 53.8% in February, according to data from S&P Global Market Intelligence, after the telecommunications equipment specialist announced strong fourth-quarter results.

That's not to say Infinera's results looked good on the surface. Revenue climbed just 8% year over year to $195.8 million, which translated to an adjusted net loss of $19 million, or $0.12 per share. However, both figures compared favorably to guidance provided three months earlier -- when the company also announced an ambitious worldwide restructuring plan to reduce expenses -- which had called for a wider net loss on revenue of $185 million to $195 million.

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So what

Calling the restructuring a "difficult but necessary" decision, Infinera CEO Tom Fallon noted the move effectively "reposition[ed] the company for crisper execution and increased focus on our go to market strategy."

Even better, given a nearly complete full product refresh and its healthy pipeline, Infinera told investors to expect revenue in the first quarter ranging from $195 million to $205 million, good for roughly 14% year-over-year growth at the midpoint. On the bottom line, it said that should translate to a narrower adjusted net loss of $0.11 per share, plus or minus a couple of pennies. Both ranges were far above Wall Street's expectations for a first-quarter net loss of $0.16 per share on revenue of $180 million.

Now what

During the subsequent conference call, CFO Brad Feller also predicted that gross margin should "gradually improve" as the year progresses, while revenue could potentially grow 10% or more for the full year.

That said, Infinera management also admitted that its visibility for the second half of 2018 is "limited," so urged investors to "temper expectations" until market conditions are more clear.

Even still, given Infinera's relative outperformance and optimistic outlook in the meantime -- as well as the fact that shares were trading nearly 50% below their 52-week high set last July -- it was hard to blame investors for so aggressively bidding up the stock last month. 

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.