Why Infinera's Shares Flopped

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 Infinera lost as much as 10% in early trading today and after a slight rebound look to be heading back down to that point again. The market seems to have wanted more than what amounted to a very narrow earnings beat from the company after the close yesterday.

So what: Infinera reported a loss of $0.05 per share on revenue of $128.1 million for the fourth quarter. Its EPS result was a penny better than the $0.06 loss Wall Street expected, and revenue was 14.4% higher year over year, coming in a hair ahead of the $127.4 million analysts sought. For the in-progress first quarter, Infinera expects $115 million to $125 million on the top line and a loss of between $6 million and $11 million, or a loss of $0.05 to $0.09 in EPS terms. Both estimates are in line with analysts, who were looking for $119.5 million in revenue and a $0.07 loss.

Now what: When your stock rises by 50% in three months, then expectations can be understandably high going forward. Nothing in either Infinera's report or its guidance seems particularly impressive, and this seems to be the catalyst behind a loss of investor interest. To sustain a rally, a company needs to continue to offer some reason for optimism, and Infinera just didn't have a reason today.

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The article Why Infinera's Shares Flopped originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights.The Motley Fool recommends and owns shares of Infinera. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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