Zhone Technologies (ZHNE) Loses One-Fifth of Value After Earnings

NEW YORK (TheStreet) -- Zhone Technologies (ZHNE) shares tumbled nearly 25% after fourth-quarter earnings left investors wanting more. Prior to the day's falls, the high-momentum stock had exploded 1,311% since the beginning of 2013.

After market close Wednesday, the micro-cap reported net income for the December-ended quarter of 4 cents a share, a penny lower than earnings in the preceding quarter. Revenue of $32.3 million was 14.1% higher than the year-ago quarter.

For fiscal 2013, the manufacturer of smartphone networking equipment recorded net income of 14 cents a share on $122.25 million in revenue. Analysts surveyed by Yahoo! Finance had expected net income of 15 cents a share on $122.47 million in revenue.

"When we entered 2013, our primary financial goal was to generate profitability for the year as a whole," said CEO Mory Ejabat in a statement. "Having achieved both top line growth and profitability, we enter 2014 with two primary financial objectives: generating continued revenue growth and improving profitability."

By late morning, shares had plummeted 24.5% to $4.69.

TheStreet Ratings team rates ZHONE TECHNOLOGIES INC as a Hold with a ratings score of C. The team has this to say about their recommendation:

"We rate ZHONE TECHNOLOGIES INC (ZHNE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

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