Why Shares of Sonus Networks Soared Today

By Timothy Green Markets Fool.com

What happened

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Shares of communications service provider Sonus Networks (NASDAQ: SONS) jumped on Wednesday after the company reported its first-quarter results. Sonus beat analyst estimates for both revenue and earnings, leading investors to push the stock up 16%.

So what

Sonus reported first-quarter revenue of $53.4 million, down 9.8% year over year but about $1.3 million higher than the average analyst estimate. Product revenue fell 27% to $25.4 million, but service revenue rose nearly 15% to $28 million.

Image source: Sonus Networks.

Non-GAAP EPS came in at a loss of $0.09, down from a gain of $0.03 during the prior-year period. Analysts were expecting a bigger loss of $0.13 per share. Lower revenue and higher research and development costs drove down the bottom line compared to the first quarter of 2016.

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Sonus President and CEO Ray Dolan pointed to new products launched during the first quarter and key customer wins for the company's better-than-expected performance. He took a dig at Sonus' rivals: "Unlike many of our competitors,Sonus Networksis investing in the real-time communications security market, catering to both service providers and enterprises. We believe that this focus will result in a unique security offering, which leverages our deep experience in SIP."

Now what

Sonus expects to produce around $107 million of revenue during the first half of 2017, with $54 million coming during the second quarter. On a non-GAAP basis, Sonus expects to post a net loss of $0.10 per share during the second quarter.

For the full year, Sonus believes that revenue will be flat to up by a low-single-digit percentage compared to 2016, implying that business will pick up in the second half, counteracting a weak first half.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.