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Why Extreme Networks, Inc. Stock Jumped 15% Today

What happened

Extreme Networks (NASDAQ: EXTR) reported fourth-quarter results on Monday night, blowing Wall Street's estimates out of the water. In response, the enterprise networking expert's shares jumped as much as 14.7% higher in Tuesday's early trading before settling down to a 10.1% gain at 11:15 a.m. EDT.

So what

Sales rose 28% year over year, landing at $179 million. Adjusted earnings per share more than doubled from $0.07 to $0.17. Analysts would have settled for earnings of $0.07 per share on sales near $172 million.

Now what

Extreme Networks' strong fourth-quarter sales rested on solid organic growth in the company's core switching equipment sales. Gross margins expanded thanks to "disciplined" pricing policies. Together, these trends added up to a stellar bottom-line performance.

Looking ahead, Extreme just closed one large acquisition and is preparing for the final John Hancocks on another one. Already the third-largest network company in the equipment sector, Extreme is building its economies of scale via a combination of plug-in buyouts and solid execution in the core business.

Share prices have more than doubled year to date, including today's sudden surge. Extreme Networks is on a roll, and investors are bidding up its stock prices for all the right reasons.

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Anders Bylund 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.