As the world increasingly goes wireless, a variety of equipment suppliers are enjoying the growth. One such player is Ditech Communications (NASDAQ:DITC).
Founded in 1983, the company builds solutions that solve mismatches with voice networks -- by canceling the echo on cell-phone calls as well as enhancing the quality of the communications. This is no easy feat, requiring advanced software and digital signal processor technologies.
The company has a strong customer base that includes biggies such as Qwest (NYSE:Q), Nextel (NASDAQ:NXTL), and Verizon (NYSE:VZ).
Yesterday, the company announced its earnings, and investors certainly were surprised as the stock surged 14.68% to $20.93. Ditech posted revenues of $25.5 million, which was a 138% increase from the same period a year ago. Net income from continuing operations was $10.1 million, compared with a $500,000 loss in the same period a year ago.
The company has restructured its operations, resulting in a leaner organization. For example, Ditech recently exited the optical business by selling the operations to JDS Uniphase (NASDAQ:JDSU).
The upshot is that Ditech is focused on a growing area of telecom. And, according to management, the growth is expected to continue; that is, management upped its guidance, indicating that for the next quarter revenues are expected to grow 8% to 10% sequentially and that gross margins will be in excess of 70%.
Fool contributor Tom Taulli is the author of The EDGAR Online Guide to Decoding Financial Statements . He does not own shares in any of the companies mentioned in this story.
