Shares of optical networking component maker Oclaro (Nasdaq: OCLR) are worth a fraction of yesterday's price today -- about three-fifths, in fact.

The stock took a 38% hit after reporting the double error of weak first-quarter results and an even worse outlook for the coming period. The report was so distressing, in fact, that it also caused 10% drops or worse in early trading for competitors Oplink Communications (Nasdaq: OPLK), JDS Uniphase (Nasdaq: JDSU), and Finisar (Nasdaq: FNSR). Oplink is due to report earnings after the bell and JDS next week; the next update from Finisar is over a month away.

Oclaro's sales increased by 42% year over year to $121 million, but The Street had expected a couple of million more than that. The company's $0.06 of non-GAAP income per share was way less than the $0.22 analyst target. Management decided to stick with "cautious" guidance, but reminded investors that, in its opinion, "the growth prospects for Oclaro and our customers in 2011 continue to be strong."

Given the multiple buildout projects of next-generation wireless networks and the continued general growth of networking needs across the globe, I would agree with the positive long-term assessment. I remain a fan of the optical networking industry, and this severe hit looks more like an opportunity to build a position than a signal to get out.

We'll have more clarity after the Oplink and JDS reports, of course. If those guys pile on with more of the same demure forecasts, there's an industrywide slowdown going on that should eventually spread to upstream networking specialists, including Cisco Systems (Nasdaq: CSCO) and Juniper Networks (Nasdaq: JNPR), in the next earnings season. If not, Oclaro's problems could very well be Oclaro's own.

To follow this nail-biter of a story, add Oclaro and any other optical networkers you like to your watchlist.

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.