And so the other shoe drops. But this is no time to panic.

Finisar (Nasdaq: FNSR) shares plummeted after a disastrous third-quarter report three months ago and had settled down at a 56% single-quarter loss as of last night. But that wasn't bad enough. The fourth quarter was no better, and the stock lost another 18% in after-hours trading. The fun never ends, does it?

In Finisar's defense, the maker of optical networking components matched its own fourth-quarter targets with adjusted earnings of $0.33 per share on $237 million of revenue. That's in spite of slow sales to telecom customers, particularly in China. Then again, that original guidance was a huge downer to begin with and a big part of Finisar's recent downfall.

What's worse, the next quarter isn't getting any better. The Chinese situation isn't improving, and telecom remains soft. Hence, the forecast for the first quarter of fiscal 2012 once again comes in far below analyst expectations.

Finisar's gloomy report is dragging down the entire ecosystem of optical networking components and their customers, the system builders. As I write this, JDS Uniphase (Nasdaq: JDSU) shares are down by 5%, Oclaro (Nasdaq: OCLR) lost 6%, Nokia (NYSE: NOK) dropped 3%, and Alcatel-Lucent (NYSE: ALU) swooned to the tune of 2%. These are the people who depend on or operate in the markets Finisar just described as "soft."

Is there any light at the end of the tunnel? Finisar Chairman Jerry Rawls would like to think so: "As we look at historically at inventory corrections in our industry, they typically have taken one to three quarters. We're very hopeful that this one is a two-quarter phenomenon and then growth will resume," he said in the analyst call. The October quarter could present renewed growth if that prediction turns out correct.

One thing's for sure: The downturn in the networking sector won't -- can't! -- last forever. Finisar may be suffering right now, but 2011 was a banner year for the company despite two slow reports in the second half, with sales racing 50.6% higher year over year on significantly stronger margins. Unlike networking generalist Cisco Systems (Nasdaq: CSCO), which lost its way and is looking for a new direction, Finisar doesn't have any structural problems and should bounce back with gusto.

If I didn't already have a thumbs-up rating on Finisar in our CAPS system, I'd start one today. The market always overreacts to drastic news -- good or bad -- and you can get rich exploiting that tendency.

Perhaps you're not quite ready to commit to Finisar's planned rebound. Take a look at this free report on the top stock of the year -- a relatively unknown networking picks-and-shovels play that's primed to profit from growing network traffic whether it's wired or wireless, copper or optical.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems. Motley Fool newsletter services have recommended shorting JDS Uniphase. 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.