"At the recently held Interop Las Vegas 2012 conference, the company announced updates to application delivery optimization, a new feature set on its BIG-IP ADC products. It claims that the application delivery optimization makes BIG-IP the first ADC on the market to support Google’s SPDY protocol.  F5 currently holds roughly half the market, having long overtaken Cisco Systems as the number one ADC supplier.
With a growing enterprise need to support all of its end users from a device standpoint, mobile application delivery support is the next logical step for many application delivery controller vendors.
F5′s focus on mobile application delivery, keeps it well in line with changing trends and developments. The company currently holds around 28% share in the application delivery network market, and we believe this will increase to around 38% by the end of our forecast period.
F5 Networks' Application Delivery Network Market Share represents the revenue share of application delivery network enjoyed by F5 networks.
HISTORICALS & FORECAST
Historically, F5's market share in ADN market increased from 19% in 2007 to 25% in 2011.
We expect F5's market share to increase to 38% by the end of the forecast period.
We took following points into consideration for our forecast:
Strong focus on applications and feature-rich products
F5 has remained the market leader during the past 12 months, and strong sales performance has enabled it to grow its market share (to 47% in ADC segment).
F5’s investment in iRules and iControl results in strong partnerships and loyal customers that would find it difficult to migrate away from F5. Integration with popular integrated development environments (IDEs), such as Eclipse and .NET/Visual Basic, also contributes to customer stickiness as these features provide easy way to control and configure the services on BIG-IP platforms. Ease of configuration reduces the complexity of the systems and hence, making it easier for IT departments.
Strong customer focus and service
F5's online community known as DevCentral, has over 65,000 members. DevCentral brings users and developers together to solve problems and share ideas. It provides a real-time forum for F5 to better understand the challenges its customers face and helps F5 prioritize and develop new features and functionality based on real customer needs.
F5 has been good at developing technology partners and alliances
F5 has long-term relationships with major application vendors, including Microsoft, Oracle and SAP through which, it provides design, test, document, publish, and support solution best practices, value-added benchmarks and results, and integrations with automated template and polices for ease of deployments.
F5 works with its infrastructure alliance partners to design, build, and optimize datacenter infrastructures for application delivery and data management. Infrastructure alliance partners include DataDomain, NetApp, Quova and Infoblox.
F5 works with its security alliance partners to increase network, application, and data security, limiting access to authorized users based on predefined policies. F5 incorporates security checks directly into the fabric of the network to improve performance, efficiency, and security. Partnerships include Computer Associates, Oracle, RSA, Microsoft, Oracle, IBM, McAfee and WhiteHat.
F5 works with the two major server virtualization vendors, Microsoft and VMware, to help customers get the most out of their virtualization deployments. F5 is also a VMware Select Partner.
(read more at the link above)
15-20% EARNINGS GROWTH PER YEAR!
Spectacular earnings growth ahead. Just on fiscal 2013 estimates alone from analysts:
From $4.44 to $5.19
I must concur that my calculations agree with this article of ~20% growth in earnings:
"Analysts expect the company to earn $4.44 per share this year. This translates to a growth of 17% compared to the same period last year. FOR THE NEXT 5 years, the company is forecasted to grow its earnings by 19% a year."
I believe the reason being the mobile market is going to be exploding these next 5 years with quad-core, hexacore, 8-threaded, and 12-threaded tablets, and smart phones growing exponentially across all developing countries. F5 Networks will be supporting this massive growth which will double to triple its revenues while growing earnings over 15% per year minimum.
Historical p/e of 38 * $5.19 2013 estimates = $197.22
Price Target next year = $145
Price Target in 1-3 years = $200
Excellent...a very disruptive technology which will increase the stock price over time, like clockwork.
From the article:
"F5′s application delivery optimization offering provides a better mobile user experience, optimizing image delivery and rendering of web pages in a much quicker environment. By supporting the SPDY protocol, F5 has reordered content and streamlined image-intensive web sites by 40% on average. Mobile users can reap the lower latency benefits with quicker download times for web sites and web-based applications, and optimized and reordered images for their mobile devices, via the SPDY protocol.
Optimized mobile application delivery can enhance the end user experience without driving up IT infrastructure cost, and the lower latency can bring more traffic to a site that can translate into higher revenues for the enterprise."
Why F5 will continue its market leading status:
* Market Leader with half the ADC overall segment (ADC optimization and delivery)
* First to support SPDY
* 40% performance gains and lower latency
* Enhance speed and user experience without driving up infrastructure cost