Broadband Stimulus Vendors Are Cleared For Takeoff

| About: Calix, Inc. (CALX)

Tuesday evening, Calix, Inc. (NYSE:CALX) reported Q1 results, including $78.6 million in revenue and a penny of EPS. The sales fell shy of expectations. However, earnings topped Wall Street's break-even estimates. More importantly, investors were wowed by commentary regarding the company's future.

Specifically, bookings are on the rise and Broadband Stimulus demand is picking up. Consistent with our earning preview, demand appears to be turning the corner. This should lead to accelerated revenue growth in 2012.

This completes a trifecta of optimistic views provided by Broadband Stimulus-related vendors. ADTRAN (NASDAQ:ADTN) also provided positive commentary regarding Broadband Stimulus demand in early April. Similarly, Zhone's (ZHNE) last earnings call revealed "a strong increase in orders" leading to a "better than expected backlog driving optimism for 2012 and a much stronger second quarter."

Shares of CALX rose 17% on the news. ADTN didn't experience a similar rise when it announced earnings results, but the shares are beginning to creep upward.

For small-cap investors, ZHNE may offer the greatest upside. Despite its rosy outlook, its shares continue remain under $1.00. Further, Pipeline Data believes the company could be acquired at a substantial premium. Its balance sheet and income statement offer an attractive combination of value and potential accretion (via expense reductions and sales synergies).

In addition, on CALX's earnings call, management expressed keen interest in improving its international footprint. ZHNE would provide CALX with a business that derives over 60% of revenue from outside of the U.S., despite a substantial commitment to U.S.-based manufacturing.

Net-net, all three vendors are seeing cause for optimism. In addition, we have confirmed these claims with industry experts. With fiber optic cable availability back on line and Stimulus spending on the rise, ADTN, CALX, and ZHNE all appear poised for a strong Q2 and 2012.

Disclosure: I am long CALX, ZHNE.