Sonus Networks (SONS)

Company. Sonus Networks is "a leading provider of voice infrastructure products for the new public network. Our proven solutions enable service providers to quickly and effectively deploy an integrated network capable of carrying both voice and data traffic, and to deliver a range of innovative, new services." (Sonus Networks website)

Buy. I had been watching SONS for a couple of months. Coming off a two-year low of $0.18/share in October 2002, the SONS chart was showing a nice upward trend, but the price was well below my range of $5-8. I bought on a down day after it crossed the $5.00 threshhold.

The stock price then took a tumble that I now recognize as predictable. I've since figured out that I need to be more patient making my buys. The stock screens that I use pick up a stock when it starts to make strong moves, and I have typically jumped right in. What I now see is that after the sharp move there is almost inevitably a dip while the price "consolidates" at a new plateau. If I can learn to wait until the consolidation period is over I'll both be able to buy at lower prices and endure less anxiety waiting for the rise to continue.

Sell. Two things happened to catalyze a big jump in SONS' price: they announced earnings that beat expectations by a penny and also announced a big multi-year contract with Verizon. Nevertheless, I decided this would be a good opportunity to take some profits:

• SONS had already run up over 850% since the low last October at $0.18 — that's a helluva rise for a company that's still losing money
• The telecom industry is very volatile anyway, — one negative "surprise" from another company in the industry could send the price into the sewer
• The market has enjoyed a huge rally — the Nasdaq is up 24% year to date — there's a lot of chatter about the market "getting ahead of itself," that earnings don't justify the increase

In other words, a "bird in the hand" looked pretty good.