Is Calix Networks (CALX) back? Skeptics who have burned before might have reason for caution, but the company's earnings beat gives the optimists a reason to look forward to an expansion in 1 Gigabit broadband deployments.
New service provider investment in Calix's access equipment was evident in the company's earnings report. In reporting its second quarter 2014 results last night, Calix reported sales of $98.0 million, up 4% above the same period last year and above consensus analyst estimates of about $95 million. The reported earnings per share (EPS) of $0.10 was better than consensus estimates of $0.01. Shares popped about 11%, rising to nearly $10 in morning trading.
As we've reported here, interest in deploying gigabit Ethernet as a premium service for high-tech business is growing among service providers, and there has been a noticeable uptick in deployments. The trend is also supported by government stimulus policies.
"The sales upside came as a pleasant surprise and included improved spending from tier 2 & 3 operators, recognition of deferred revenue from stimulus projects, and perhaps increased share from top customer CenturyLink," wrote Raymond James Managing Director and analyst Simon Leopold in a research note this morning. "We envision Calix's business as stabilizing with the improved tier 2 & 3 spending, but visibility remains a challenge; at least y/y comparisons for 4Q and 1Q appear fairly easy."