The market will get to hear the latest from Motley Fool Hidden Gems recommendation and wireless network solutions provider Ceragon Networks (Nasdaq: CRNT) this Friday. Let's see what may become of earnings in Ceragon's first quarter.

What analysts say:

  • Buy, sell, or waffle? Of 12 analysts rating Ceragon, 10 say buy and two give it a hold rating. The company holds a top-notch five-star stock rating in the Motley Fool CAPS community, with more than 1,420 opinions given.
  • Revenue. On average, analysts predict quarterly sales to rise 36% over the same quarter last year, to $46.2 million.
  • Earnings. Profits are expected to grow even faster, to $0.13 per share.

What management says:
With a stock that's been trending downward over the past several months, many investors -- including this Fool -- have been wondering what's going on at Ceragon. But as we often emphasize here at the Fool, the stock doesn't tell you anything fundamentally about a company, which is why you shouldn't base decisions on stock movement.

Little has changed in outlook for the company as service providers such as Verizon Wireless -- a joint venture of Verizon Communications (NYSE: VZ) and Vodafone -- and AT&T (NYSE: T) will be driving demand for broadband backhaul solutions. In its last earnings report, Ceragon President and CEO Ira Palti noted that "the primary growth drivers for high-capacity wireless backhaul remain in place and we have a large pipeline of opportunities. We are looking forward to another year of growth in 2008."

What management does:
In the recent quarter, margins remained strong as the company kept a lean structure.

Margins 

9/06

12/06

3/07

6/07

9/07

12/07

Gross

34.9%

25.5%

26.5%

27.4%

29.1%

36.1%

Operating

2.3%

(6.2%)

(3.5%)

(1.5%)

0.2%

7.7%

Net

(4.0%)

(5.0%)

(2.6%)

(1.1%)

0.4%

8.1%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Ceragon's growth potential is strongly tied to the broadband upgrade cycle that has telecom operators around the world boosting capacity in their networks. Uncertainty about the pace of Clearwire (Nasdaq: CLWR) and Sprint Nextel's (NYSE: S) WiMAX rollout has hurt Ceragon, but lackluster outlooks from other network equipment providers such as Nokia (NYSE: NOK) and Siemens' joint venture and Alcatel-Lucent (NYSE: ALU) have also had investors hedging on Ceragon's prospects.

But network expansion concerns are near-term in nature -- adding broadband capacity to wireless networks around the world is just a matter of when. So the long-term possibilities with Ceragon are still there if the company can position itself to capture a good portion of this business, as it has done in the past.

More Foolish insight:

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 owns shares of Alcatel-Lucent and is the author of The Qualcomm Equation. Sprint Nextel is an Inside Value recommendation. The Fool's disclosure policy is strikingly obvious with its intentions and has never used the "I just want to be friends" line.