Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Finisar Corp. (Nasdaq: FNSR) dropped 38% in intraday trading today after issuing scary guidance for the current quarter. The bad news is also dragging down other optical networking stocks, including JDS Uniphase (Nasdaq: JDSU), Oclaro (Nasdaq: OCLR), Opnext (Nasdaq: OPXT), and Oplink (Nasdaq: OPLK).

So what: Current-quarter guidance is for revenue of $235 million to $250 million and non-GAAP EPS of $0.31 to $0.35, well below consensus expectations of $269 million and $0.48, respectively. Management blamed the disappointing outlook on annual price negotiations that typically take effect on Jan. 1, the 10-day Chinese new year shutdown, an inventory adjustment at some customers (particularly for products which had been on allocation and long lead times), and "a slowdown in business in China overall."

Now what: The price negotiations and Chinese new year shutdown are annual events that should not cause negative surprises, unless prices are under unexpected pressure. The inventory adjustment on the heels of tight supplies suggests customers were double or triple ordering so partial shipments would meet their needs, creating a false picture of robust demand. The combination of a near-term adjustment and overall slowdown makes it hard to assess how deep or long this correction will be.

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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.