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Aruba Networks, Inc. (ARUN) Message Board

  • opalockamishabob opalockamishabob May 17, 2013 12:06 PM Flag

    From This Morning's I.B.D.

    Hurricane Cisco hit wireless gear maker Aruba Networks (ARUN) last quarter.

    That's the moniker Jefferies analyst George Notter gives the tech giant in a research report that speculates other corporate suppliers of data center and networking equipment — such as Juniper Networks (JNPR), F5 Networks (FFIV) and Riverbed Technology (RVBD) — might also be affected by Cisco Systems ' (CSCO) more aggressive marketing.

    Shares of Aruba were down 28% in early trading Friday in the stock market, at 10-month lows, after the company's fiscal Q3 results posted late Thursday missed lowered expectations.

    View Enlarged Image

    Aruba reported that earnings per share minus items for its fiscal Q3 ended April 30 fell 8% to 11 cents, missing estimates by a penny. Sales rose 12% to $147.1 million, in line with views.

    Aruba's fiscal Q4 guidance for EPS ex items of about 11 cents and revenue of $149 million was below expectations. Analysts polled by Thomson Reuters were looking for EPS ex items of 17 cents on revenue of $157.1 million.

    Aruba had warned on May 7 that Q3 sales and earnings would be below consensus estimates, as IBD reported.

    Cisco, meanwhile, late Wednesday reported better than expected results and gave an outlook that met views. Its shares rose 12.6% on Thursday. Here's IBD's report.

    Corporate and government build-outs of Wi-Fi networks have been giving Aruba as well as Ruckus Wireless (RKUS) a boost. On its earnings call, Aruba said Cisco has been offering customers bigger price discounts.

    Jefferies' Notter says there might be some validity to Aruba's finger-pointing.

    "We think it's quite possible that Aruba fell victim to Cisco's last-minute push to close large enterprise business. Unfortunately for Aruba, they have the misfortune of having the same fiscal quarter end as Cisco. ... It's possible that Aruba is seeing this Cisco-struggling-to-beat-the-economy-and-hit-numbers-anyway effect before others."

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    • RBC Capital analyst Mark Sue says Aruba could be acquired.
      "It appears Cisco's going after the Wi-Fi market by bundling its enterprise solutions, being a price aggressor and elongating wireless sales cycles as IT managers review platform options and benefits from Cisco," he said in a report.

      Sue added: "Aruba's not likely to drop prices anytime soon and may instead focus on software and security differentiation. Nor is Aruba expected to partner with a large tech partner. At a point, we believe Aruba becomes an attractive target, and the CEO has sold his prior company before."

      Chief Executive Dominic Orr was CEO of Alteon WebSystems when it was bought by Nortel Networks. Less

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