So you've been thinking about exposing your portfolio to some exciting computer networking action, but Cisco Systems (Nasdaq: CSCO) and Nortel Networks (NYSE: NT) are too big and bulky for your tastes. There's just not enough excitement in a stock that can't double in four months and then give it all back again in another four. Blue Coast Systems (Nasdaq: BCSI) did exactly that over the past eight months, and it could very well do so again.

As if the Web proxy specialist wanted to prove that point, it reported earnings above the Street consensus and revenue slightly beyond its own guidance, and it also guided higher on both counts for the current quarter. Sales grew 73% year over year to $81.4 million, and earnings per share jumped from zilch to $0.26 per diluted share. That's usually a recipe for a tasty share-price boost -- but this time, the stock slipped down by almost 10% following the report.

I don't really see any credible reason why Blue Coat's stock should be punished for these results, especially since the outlook was brighter than expected as well. One explanation I've seen bandied about is that gross margins shrank a bit and should remain compressed over the next quarter as well, but that argument doesn't hold water. This isn't some deadly price war situation, despite tough competition from the likes of Cisco, Riverbed Technologies (Nasdaq: RVBD), and Network Appliance (Nasdaq: NTAP). It's simply a case of sales growing more rapidly right now in low-margin markets such as Europe and Asia.

The roller-coaster ride will surely continue until Blue Coat outgrows its small-cap short pants. With a trailing price-to-earnings ratio just north of 50, there's still room for another massive hemorrhage -- but given the growth rates here, the PEG ratio still says that the stock might be undervalued. In the long run, I think we have a winner. It just might take a barf bag or two to make it through the takeoff.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure would rather pilot the plane than bounce along in the cheap seats.