Lumera Corp. stock shot up as much as 38 percent this morning after the company announced its polymer modulator had passed Telcordia reliability testing.

The announcement would seem to indicate that Lumera's telecom-based strategy, which partly hinges on the acquisition of GigOptix Inc. (OTC: GGOX) , has at least a shot at working, from a technology standpoint. (See Lumera Passes Polymer Test.)

Shares went up by as much as 33 cents (38%) to $1.19 early in the day. By late afternoon, Lumera had stabilized at $1.07, a gain of 21 cents (24%).

Lumera did not return a call for comment.

At a time when other optics companies are looking into areas like the life sciences for revenues, nine-year-old Lumera gave up its Plexera Bioscience LLC arm in order to focus on telecom optics.

That decision got announced in March, with layoffs of 23. With just $14.6 million in cash and equivalents at the time, Lumera had to choose between funding telecom or bioscience, officials admitted.

Lumera's revised plan was to sell integrated products, combining the modulator with other devices found in optical transceivers. In looking for a partner, the company came across GigOptix, formerly known as iTerra Communications, and eventually settled on a "merger of equals" idea. (See Lumera, GigOptix Merge.)

Today's release noted that the deal is "progressing." [Ed. note: Break out the sparkling cider!]

Back around 2000, polymer materials were considered a key to 100-Gbit/s networking speeds. Cisco Systems Inc. (Nasdaq: CSCO) even bought into the idea by chipping into a $24 million round of funding for Lumera in 2001. (See Polymer's Progress and Cisco Invests in Lumera.)

— Craig Matsumoto, West Coast Editor, Light Reading