Shares of communications equipment company Applied Optoelectronics (NASDAQ: AAOI), which builds lasers and other subcomponents for fiber-optic networking, leapt 40.1% through 10:10 a.m. ET this morning after beating earnings expectations last night.

Analysts weren't overly optimistic about Applied Optoelectronics heading into Q2 results, predicting the company would lose $0.28 per share on sales of only $45.4 million for the quarter. The company easily cleared those low bars, however, delivering a smaller-than-expected loss of $0.21 per share, and greater-than-expected revenue $52.3 million.  

Still, the news wasn't great. Although revenue exceeded analyst expectations, it still declined 20.5% year over year. Granted, Applied Optoelectronics succeeded in improving its gross profit margin by 250 basis points, to 19%. But the company's operating profit margin deteriorated dramatically, falling nearly 14 full percentage points to negative 38.5%, as falling revenue struggled to keep up with rising operating costs.  

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Source Fool.com