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Technology Stocks : F5 Networks, Inc. (FFIV) -- Ignore unavailable to you. Want to Upgrade?

To: HandsOn who wrote (865)	5/5/2000 11:00:00 PM
From: puborectalis	Read Replies (1) \| Respond to of 1801

Cisco Systems made a nearly $6 billion bet today and bought ArrowPoint Communications, wagering that equipment for speeding Web site content to its destination will be big business............"got to be good sign for FFIV's segment of the business,"

To: HandsOn who wrote (865)	5/6/2000 6:57:00 AM
From: Mao II	Respond to of 1801

Thread: Here is the Marketwatch piece. M2 F5 Networks' stock continues slump By Michael Baron, CBS MarketWatch Last Update: 6:20 PM ET May 5, 2000 NewsWatch SEATTLE, Wash. (CBS.MW) -- Shares of F5 Networks Inc. lost ground Friday as investor sentiment on the stock grew increasingly negative in the wake of Cisco Systems' $5.7 billion acquisition of ArrowPoint Communications. But F5's (FFIV: news, msgs) Chief Financial Officer Richard Chamberlain told CBS MarketWatch that his company's valuation is being hurt by the false perceptions that growth at the company has slowed and that Cisco's (CSCO: news, msgs) deal with ArrowPoint (ARPT: news, msgs) represents a new competitive threat. "We're in a very good spot and a great strategy," Chamberlain said, "Our plan is to continue to execute." Shares of the Seattle, Wash., provider of Internet content management software products closed down 5 7/16, or 14 percent, at 33 15/16 on volume of 4.6 million shares. Average daily volume is 812,600. F5 was hit hard following an in-line earnings report on April 26, dropping 25 percent to close that day at 44 1/8. Earnings rose to $4.1 million, or 18 cents a share, in the second quarter, showing significant progress from last year's loss of $3 million, or 45 cents a share. Revenues posted a whopping 527 percent increase to $23.6 million from $3.8 million in the same period a year earlier. Even the sequential revenue comparison, a 23 percent jump from the first quarter, was flattering. F5 said the improved results were driven by "increased sales of all of the company's products, to both new and existing customers, and by a significant increase in service revenue and sales internationally." The company even gave a bullish growth outlook for the rest of the year. "Sales growth momentum and strong margins have enabled F5 to sustain profitability despite a continuing ramp-up in infrastructure to support our growth," said Jeffrey Hussey, the company's chairman, president and chief executive officer in the April 26 press release. "We expect that F5 will deliver sequential quarterly sales growth in the low to mid teens, and continue to post profits and positive cash flow in the second half of fiscal 2000." Chamberlain said this forecast of "low to mid teens" quarterly sales growth sparked a sell-off in the stock when it was perceived by investors as the company scaling back expectations in light of the second quarter's 23 percent sales jump. In actuality, Chamberlain said, the forecast represented an increased outlook from F5's previous guidance for 10 percent growth. As for the idea that Cisco's acquisition of ArrowPoint makes for tougher competition, Chamberlain disagreed because while the deal increases the number of spaces where the companies compete directly, F5 still offers a multitude of products that networking giant Cisco can't match, including the only end-to-end Internet content delivery infrastructure and traffic management package. "We only see ArrowPoint as a competitor on the local level, in maybe 4-to-6 percent of our business," Chamberlain said, "And Cisco was already our number one competitor at around 40 percent. We still have no competition for around 50 percent of our products." Bear Stearns analyst Bob Lam agreed with Chamberlain's assessment of the situation, echoing his comments that F5 sees zero competition for many of its products and that the second quarter was misinterpreted. "They have the best-in-class product and the only end-to-end solution," Lam said. Lam, who has a buy rating on F5, said he raised his earnings estimates for the second half of the year following the second quarter earnings report. Lam even went so far as to say that Cisco's acquisition of ArrowPoint was a "positive" for F5 because the deal could be viewed as a sign that the Internet traffic space is getting overcrowded. "This could make them (F5) an acquisition candidate," he said. As for the market's treatment of the company's stock, Chamberlain found the fluctuations confounding. "I think that very often the market overreacts," Chamberlain said, "both positively and negatively." Michael Baron is a reporter for CBS MarketWatch. cbs.marketwatch.com