When EXFO (TSX: EXF, Stock Forum) sliced off its Life Sciences and Industrial Division back in 2010 to focus on its telecom and test assurance market, it seemed as though the company had slimmed down for success. However, markets remained depressed and relatively uncertain, eventually driving wireless operators in 2012 and 2013 to tighten their belt when it came to capital expenditures in an effort to ride out the poor economic climate and continuing European debt crisis.
Regardless, the company continued to innovate with the release of the first all-in-one optical and Ethernet testing module in November 2013 and the first auto-focus fiber inspection probe for field work in early 2014.
The company also moved to better position themselves within the sector with the strategic asset acquisition of ByteSphere, private company based out of Boston area specialized in global IT management and network monitoring solutions, and by picking up the business of Aito Technologies, a Finnish provider of customer experience analytics for wireless network operators.
Its hard work was beginning to pay off when the company reported in June that it had managed hit sales during the quarter of US$63.9 million, up 24.8% quarter-over-quarter and 8.5% year-over-year. Its gross margin had also improved to 63.3%, beating the preceding quarter and matching 2013 period. Net earnings did an about face, listing at US$1.7 million versus a net loss of US$0.9 reported in Q3 2013.
EXFO is considered one of the key domestic players in the telecommunications test and service assurance sector, and faces many challenges as the volatile sector continues to grow, but hopefully as the global economy continues to improve and EXFO makes its intended headway into the Chinese market, it will find the stability that investors will feel safe with.
Sierra Wireless (TSX: SW, Stock Forum) continues its rise in the market, hitting another 52-week high fresh off its announcement of record revenues in Q2 2014 and the shipment of its 100th million connected device since it developed the world's first embedded cellular module in 1997. As I said before, this company seems to be making all the right moves.
Another company hitting a 52-week high yet again is DHX Media (TSX: DHX, Stock Forum) its smart acquisitions and production deals surrounding children and young adult entertainment has made it a going concern. Now with its deal to bring legendary toddler entertainment icons, Teletubbies, back on air for another 60 episodes, it looks like the sky's the limit if the brightly colored Twinky Winky and company can reconnect with their young audience. The 'pick and play' option currently being weighed by the CRTC may also have an adverse effect on the company's ability to continue its upward march in the market.