Wireless network equipment provider Ceragon Networks (Nasdaq: CRNT) capped off 2007 by delivering what it promised six months ago -- about 40% revenue growth. The Motley Fool Hidden Gems recommendation reported fourth-quarter earnings that included a revenue increase of 40%, to $46.1 million. The full year was even better -- the company's sales increased 49% over 2006, to $161.9 million.

On a GAAP basis, the company reported net earnings of $4.4 million for the quarter and $13.1 million for the full year. Considering that Ceragon was still reporting losses last year, one would think that the new profit trend would be reason to celebrate -- yet investors spanked Ceragon shares for a 17% loss yesterday.

Ceragon's shares had jumped over the past few days after an upgrade from banking firm Collins Stewart, so the drop puts the stock at essentially the same level as last week. But it escapes me what drove such a negative reaction to the company's earnings. Granted, the company guided revenue to an essentially flat range of $44 million to $48 million for next quarter, and expects revenue growth of "only" 25% to 30% for 2008 at this point.

But Ceragon is piecing together a solid operations picture. Gross margins are holding at around 36% and operating margins have been increasing toward the goal of 10% the company would like to see in 2008. Ceragon has been very successful at winning business through OEMs such as Nokia (NYSE: NOK) and Siemens (NYSE: SI), as well as directly to major customers such as Sprint Nextel (NYSE: S) and Vodafone's (NYSE: VOD) Essar subsidiary in India.

Future trends look very positive for Ceragon as well -- the company noted that it doesn't see any impact from larger economic issues at this point and expects demand to continue. Since Ceragon's products help carriers cut costs and meet surging bandwidth needs, its items are more of a need than a want. Wireless carriers such as Verizon (NYSE: VZ) and AT&T (NYSE: T) must upgrade their networks over the next several years to deal with the huge demand for broadband wireless data, giving Ceragon plenty of opportunities around the world.

So even with dilution from a recent share offering, there's a lot to like about Ceragon's prospects. The dip in the stock makes the growth more attractive at a current GAAP earnings multiple of 24, particularly if the company can deliver on revenue and earnings growth targets.

Ceragon Networks was selected by the Motley Fool Hidden Gems team for its great growth prospects. To see what other stocks Tom Gardner and Bill Mann think will beat the market, take a free 30-day trial.

Fool contributor Dave Mock avoids ladders, black cats, and cracks in the pavement. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Sprint Nextel is an Inside Value recommendation. The Fool's disclosure policy can double Dutch with the best of them.