New FFIV Article...
stockhouse.com
Also this info from RB board:
Miami, FL, June 5 /SHfn/ -- For investors seeking an undervalued play in an
extremely high growth sector, F5 Networks [FFIV] could be just that. Chase H&Q
Networking and Communications analyst Erik Suppiger believes F5 is very undervalued
and he holds a 'buy' rating on the stock.
FFIV hit a high of $160 « last November when jaw-dropping earnings planted the
company firmly into profitability and shocked
analysts who were expecting a loss. Since that time, F5 has slid steadily lower, and may
have found its bottom in the $30 range.
Suppiger remains extremely bullish, commending the company's strategic positioning
against some competitors for whom he sees
storm clouds ahead.
As the dot coms sidestep traffic jams, struggle with security, wrestle packet loss, and
hoard data close to the end user, the need for
speed in web content management has never been more pronounced. The notion that
web traffic is accelerating is well-received to
be sure. Companies are scrambling for the tools to fortify their infrastructure to support
critical Web applications and boost Net
performance. Many have turned to content management firms for caching, routing and
load balancing solutions to manage their
networks.
F5 Networks has built its reputation by providing Internet Traffic and Content
Management (iTCM)
products to service providers, e-commerce firms and other high traffic web site
operators. F5 is a
specialist in load balancing, a subset of the larger content management category. The
Seattle-based
company has built a big name on Big-IP, its flagship appliance solution. As well, the
company
develops software products that manage traffic and content at the local server farms or
across the
network. Big-IP is an intelligent, load balancing product capable of directing traffic to the
most
appropriate servers and applications. Big/IP will sniff out the fires, and will direct traffic
away from any
malfunctioning servers or applications thus maximizing uptime and improving ROI for
F5's clients.
F5 clients can buckle up for take off in coming months as the Jet Assisted Take Off
(JATO) project is ready to fly. JATO is a card,
integrated into the back of the Big-IP controller that will accelerate the performance of
the box quite considerably, according to
Chase H&Q analyst, Eric Suppiger. This is significant, he attested, because it allows F5,
which has traditionally been slower than
its hardware-based rivals, to accelerate its performance, while offering a rich features
set that its switch-based rivals do not offer.
Alteon Websystems [ATON], ArrowPoint, and Top Layer Networks provide intelligent
switches and contend in the hardware-based
solutions space.
"The load balancing market has been growing at an extremely rapid pace over the last
year," stated Suppiger. Load balancing can
be achieved with a hardware-based approach, in the switch itself, or by software with an
appliance-based approach, as F5 does. He
believes the switch-based market will become extremely competitive as the established
vendors take considerable market share in
that market. Cisco's ravenous acquisition of switch-based content management firm,
ArrowPoint Communications [ARPT] for $ 6
billion confirms the voracious appetite for the world of content management. The
integration of load balancing solutions into their
switches will shake up the hardware-based load balancing specialists such as Alteon
Websystems. In contrast, F5 and the other
appliance-based load balancing vendors could develop additional content and traffic
management capabilities that can't be replicated
in a switch. Based on his firm's analysis of the company, Suppiger said, "We think that
F5 is the best positioned of the
appliance-based load balancing vendors."
F5 has forged relationships to OEM its software and network processor technology to
switch vendors
3Com [COMS], Extreme Networks [EXTR] and Cabletron Systems [CS] and to server
vendors
Hewlett Packard [HWP] and Dell [DELL]. And in recent announcements, F5 entered
strategic
relationships with content delivery firm Akamai [AKAM], and with caching specialist
CacheFlow. F5
will work jointly with each company to develop products to optimize intelligent load
balancing and
content delivery, particularly for e-Business networks. In Suppiger's opinion, these
alliances exhibit
interoperability that is totally unique to F5.
Interest from other vendors was evident at the Networld + Interop conference in Las
Vegas, earlier in May, where F5 was policing
heavy traffic of another kind. Brett Helsel, F5's Senior VP of Product Development told
StockHouse, "People who are looking at
worldwide traffic today are principally looking at 3DNS." 3DNS was the second product,
launched after Big-IP, and has now gained
worldwide acceptance, Helsel explained. This product allows corporations to tailor their
traffic management to their actual business
objectives because 3DNS will accept certain routing criteria based on time of day or
server farm, network, or policy based metrics.
For example, a New York city bank can command 3DNS to route traffic globally and
keep it away from its NYC data center between
7-9 am.
The application of such conditional routing policies becomes increasingly valuable in Asia
and Europe where demographics,
language requirements and Internet cost structures are very different. In Asia, traffic
faces various cost and tax structures as it
crosses multiple territories and governments. 3DNS can help businesses be profitable in
many cases by setting their traffic
distribution based on policies. A Hong Kong business, for example, could avoid the high
costs of moving traffic to Japan or the
United States by allowing that traffic to remain in Hong Kong. This requires the
integration of F5 technologies such that content can
be maintained and served from the edge of the network rather than travelling
superfluously across great distances.
Of all the products displayed at the Networld + Interop show, the yet-to-be officially
announced product stole the thunder. Although
shipping is not expected for a couple months, F5 displayed EdgeWorks, its newest
offering, aimed at integrating the capabilities of
F5's entire product suite. EdgeWorks will be targeted toward network providers and
companies with servers and caches worldwide.
The new product will bring the end user to the nearest copy of the requested content on
the edge servers (located close to the end
user) while diverting trouble spots on the network.
"We're seeing a lot of edge service in the year 2000," reported Brett Helsel. Edge server
solutions are ideal for streaming media
applications, he illustrated with another example, as a music provider in the US that
receives content requests from Japan could
serve up content out of Japan on a local server rather than just blast it back and forth
between the two nations. Not only would
distance costs be reduced, but the speed and quality of the content delivery would also be
superior due to the proximity. For ease
and speed of transfer, data is broken down into packets before travelling over the
network and are then reassembled at the receiving
end. For voice and sound files, dropped or delayed packets will mutate sound quality.
Edge service is desirable because it reduces
the distance the packets travel and consequently reduces potential for errors and
bottlenecks.
Also at the show, F5 officially announced the expansion of the Big-IP product family
with the addition of four new appliances for
server management, caching management and security software for firewalls. The new
products are targeted at small businesses
and are each priced under $10,000.
The company aspires to rock the investment community as it did on October 27th of last
year when it announced fourth-quarter
profits of $0.11 a share - the Street was expecting a 2-cent loss. Shares vaulted 43 %
that day and reached an all time high of $160
« a few days after the spectacular announcement. Since November, the shares have
dropped like Mercury in mid-winter, although
the company has maintained profitability and posted healthy revenue growth at home and
abroad. In the most recent quarter, ended
March 31st, the company reported net revenue of $23.6 million, up 527% from the $3.8
million in the year ago period. In the earnings
release, CEO Jeff Hussey guided for growth rates in the low to mid teens range, and
continued profits and positive cash flow in the
second half of fiscal 2000.
The complete F5 product line saw strong sales last quarter, to both new and existing
customers alike. As of March this year, the
company counted over 1,500 customers including some of the largest names in
e-commerce, financial service, Internet services,
ISPs, government, portals, healthcare and other enterprises. A substantial leap in
international sales and service revenue is
expected. |
