Three months ago, I asked what was wrong with voice-over-IP technologist Sonus Networks
I feel great about that decision today. Those large orders finally came in, and Sonus beat the pants off analyst expectations in the fourth quarter. Its $83 million in sales was 27% ahead of analyst consensus, and a $0.04 GAAP profit per share far surpassed the projected $0.01 loss per share. The stock jumped as much as 37% today, filling Sonus's average trading volume a mere eight minutes after the opening bell.
That's a market move with conviction, folks.
This will be the new normal, since the revenue forecast for 2011 also beat analyst targets by about 7% at the midpoint of the guidance range. The business is stabilizing quickly under new leadership, which settles investor fears of a botched changeover. Some of these huge share-price jumps actually make sense, believe it or not.
The freshly launched NBS 5200 series of high-performance voice session controllers is doing very well in customer trials. According to CEO Ray Dolan, the product is already contributing meaningful sales to a mix of network carriers and enterprise customers, including perennial top client AT&T
The market in which Sonus works isn't growing much, but it is a $2 billion annual opportunity, and Sonus seems intent on stealing market share.
With a chart move this large, I expect a pullback in the next few days, since investors tend to overshoot a bit in these large corrections. But I'm sticking by my shares for the next year or two, because I think Sonus is just getting started down a long and very profitable road.
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