Blue Coat Systems Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of data security firm Blue Coat Systems (NAS: BCSI) sounded a reveille and surged to a brief 24% gain in extremely heavy intraday market action.

So what: Second-quarter sales came in stronger than management -- or analysts -- had expected, driving a 70% year-over-year earnings jump. The stock settled down to a more reasonable 7% gain after the initial excitement over the huge numbers wore off. Investors didn't treat the report as any kind of industry barometer, as direct rivals Websense (NAS: WBSN) and F5 Networks (NAS: FFIV) hardly moved on the news.

Now what: At least some of the higher revenues can be explained by Blue Coat offering fewer discounts, which in turn is a sign that the market is willing to pay premium prices for what the company has to offer. It's not enough to have fast network equipment these days -- Blue Coat helps IT directors squeeze more performance and tighter security out of their existing networks. All of these things help the company outperform in times of economic crisis and tight network budgets.

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At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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