I was taking a look at the charts in the broader 'networking' space last night and its a complete bloodbath out there.  50%-ish losses in many names.  We saw similar action in 2008 before the broader market really was crushed, as there is a cyclical component within the secular growth story.  And when momentum turns, the stocks do tend to get crushed.  On the flip side, these companies appreciate dramatically when the market puts this group back in favor.

Aruba Networks (ARUN) reported last night, and came in flat with estimates, on 47% revenue growth (revenue slightly above analysts estimates).  The stock is jumping today but from very oversold levels - like many in the broader group, this stock had been cut in half from early July highs ($32 to $16)

Main wart in this report was a huge surge in operating expenses - don't mind the increase in R&D, but the large increase in sales and marketing could be more of an issue.  We shall see.

  • ....total operating expenses rose to $78.1 million, from $51.6 million a year ago. That increase was primarily the result of higher research and development and sales and marketing costs.


  • “Demand for our wireless LAN solutions continued to be strong throughout our fiscal fourth quarter, as revenue increased by 47 percent year-over-year and 8 percent sequentially,” said Dominic Orr, President and Chief Executive Officer of Aruba. “Mobile device adoption continues to accelerate resulting in proliferating demand for Enterprise mobility solutions. Revenue from the existing customer base remains strong and we are especially encouraged by our rapid new customer acquisitions adding over 4,500 customers in the last twelve months.

Aruba Networks is a leading provider of next-generation network access solutions for the mobile enterprise. The company’s Mobile Virtual Enterprise (MOVE) architecture unifies wired and wireless network infrastructures into one seamless access solution for corporate headquarters, mobile business professionals, remote workers and guests.

[May 20, 2011: Aruba Networks with Another Excellent Quarter]

[Feb 18, 2011: Aruba Networks Scorches Upward, Despite CFO Departure]

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