Extreme's shares dropped $12.31 to $94.81 as more than 17 million shares exchanged hands by market close.
Excluding one-time charges, the young network equipment maker reported net income of $9 million, or 8 cents per share, compared with income of $4 million, or 4 cents per share, during the same period last year. Financial analysts had expected 6 cents per share, according to First Call/Thomson Financial.
First-quarter revenue jumped 153 percent, from $47.2 million last year to $119.3 million this year.
"It was a great quarter; they had great revenue growth, and the stock shouldn't be down at all," said D.A. Davidson analyst Kevin Giboney.
Morgan Stanley Dean Witter reiterated its "strong buy" rating for Extreme and raised its 12-month price target from $100 to $135. Lehman Brothers maintained a "buy" rating but raised the company's calendar year revenue estimates from $400 million to $425 million.
"We have never been more confident in Extreme's fundamentals and outlook," Morgan Stanley Dean Witter analyst Chris Stix said in a report Wednesday.
Extreme sells high-speed networking devices to businesses and Internet service providers that use the technology to handle the explosion of Net traffic on their networks. The company competes against Cisco Systems, Nortel Networks, Lucent Technologies and emerging players such as Foundry Networks.