Why Ciena Shares Soared

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 Ciena rose by more than 13% Wednesday after the optical telecom equipment specialist reported fiscal third quarter 2013 earnings results.

So what: Revenue for the quarter came in at $538.4 million, which translated to an adjusted net income of $26.2 million, or $0.23 per share. That's a massive improvement over last year's adjusted net loss of $4.1 million, or negative $0.04 per share in the third quarter of 2012. For reference, analysts on average were expecting Ciena to turn in adjusted net earnings of just $0.16 per share on sales of $533.51 million.

Now what: Ciena president and CEO Gary Smith stated, "Differentiated by our specialist strategy, we have increased our market share, achieved steady growth, and delivered improved and more consistent financial performance over the last several quarters. We believe that by expanding our role in the industry and extending our reach within our markets, we will be positioned to deliver greater profitability that is more sustainable over time."

This marks the third quarter in a row Ciena has turned in positive net earnings on an adjusted basis, lending credence to long-term investors' hopes that the company's stubborn march toward sustainable profitability is for real. Shares currently look a little rich trading at 23.9 times next year's earnings, but they could still prove a bargain down the road if this momentum continues as large customers like AT&T and Verizon continue to build out their IT infrastructures.

Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access The Motley Fool's latest free report: "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

The article Why Ciena Shares Soared originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.