Ixia's Stock Shock

Who said life was fair? Test vendor Ixia (Nasdaq: XXIA) posted impressive first-quarter results Thursday afternoon and received numerous plaudits from analysts on its earnings call for its stellar financial performance (see Ixia Reports Record Q1).

Then today it lost 15 percent of its value.

Having beaten estimates with its $9.3 million profit, or 14 cents per share, from revenues of $38.4 million, the company was treated to a string of "awesome quarter" quotes from analysts. Business was particularly strong from chief customer Cisco Systems Inc. (Nasdaq: CSCO), which accounted for $15 million, about 39 percent, of sales.

The company also guided towards second-quarter revenues of $40 million to $41 million in revenues and an EPS of 13 to 14 cents.

And in after-hours trading Thursday, Ixia's share price rose 95 cents, nearly 6 percent, to $17.93.

But by early afternoon Friday that gain had turned into a $2.62, or 15 percent, slump to $14.36.

Small investors blamed that movement on the medium-term tactics of some institutional investors, and there were certainly no news events that acted as a catalyst. CFO Tom Miller says he's "surprised." "We don't know why this has happened," says Miller. "But we don't control the stock price. All we can do is run the company."

And it's running pretty well. While rival Spirent plc (NYSE: SPM; London: SPT) was taking a tumble earlier this week as it struggled to cope with a shift in demand, Ixia cited some of the same market drivers, specifically the carrier shift to IP, as something "that's helping to drive our business," notes CEO Errol Ginsberg (see OSS Decline Hurts Spirent).

And with Ginsberg planning growth through acquisitions as well as organic means, could Ixia be eyeing up Spirent while its share price is low? "We have a tender offer out for Spirent right now," he joked, before (seriously) noting, "We don't have an appetite for any large acquisitions." Single product lines or small players would be targets, he says.

— Ray Le Maistre, International News Editor, Light Reading