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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Fool contributor Anders Bylund owns shares of Sonus Networks, but holds no other position in any of the companies discussed here. Acme Packet is a Motley Fool Rule Breakers recommendation. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Alpha owns shares of Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.
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