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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (29815)	6/29/2001 12:44:12 PM
From: ColtonGang	Respond to of 37746

First Union Securities Covers FFIV 06/29/01 08:42 AM Source: First Union Securities Company Notes: Visit the CNET Brokerage Center for daily reports from the top Wall Street analysts. F5 Networks, Inc. (FFIV-NASDAQ) Company Note FFIV: Announces OEM/Reseller Agreement With Nokia Rating: 2 Price: $18.30 52-Wk. Rng.: $62-4 Shares Out.: (MM) 21.9 Market Cap.: (MM) 400.8 Key Points FFIV announced a major OEM and reseller agreement with Nokia in which Nokia would resell FFIV's load balancing and content distribution solutions as part of its networking solutions. As part of the deal, Nokia purchased a 10% ownership stake in FFIV at $14.87 or $36.7mm for 2.46mm shares. Nokia also receives a 1-yr. option to purchase an additional 10% of FFIV stock at market prices. Nokia intends to initially resell FFIV's products for use with its IP security appliances (integrated firewall/VPN) that utilize Check Point's Firewall-1/VPN-1 software. Nokia also intends to be reselling FFIV's solutions for use with its next generation IP-based wireless infrastructure, although we expect that will occur later over time. This broad strategic partnership validates the strength of FFIV's load balancing and content distribution technology. We believe FFIV is on the road to recovery and continues to maintain its competitiveness versus Nortel (Alteon) and Cisco (ArrowPoint). We reiterate our 2-buy rating and $20 price target based on 3.5x our CY2001 revenue estimate. Company Description F5 Networks, Inc. is one of the leading providers of integrated Internet traffic and content management solutions designed to improve the availability and performance of mission-critical Internet-based servers and applications. Yesterday, F5 announced a major OEM and reseller agreement with Nokia. Under the terms of the agreement, Nokia has signed a two-year OEM license and reseller agreement for F5’s full suite of iTCM products. F5 intends to recognize revenue from this OEM license and reseller agreement when sales are made to the end-user. As part of the deal, Nokia purchased a 10% ownership stake in FFIV at $14.87, or $36.7 million, for 2.46 million shares. F5’s Nokia has also receives a 1-year option to purchase an additional 10% of FFIV stock at market prices. The cash infusion from Nokia would increase F5’s total cash balances above $65 million. Nokia intends to begin shipping F5’s products by the end of Q3 2001. Initially, Nokia intends to only resell F5-branded server load balancing appliances (BIG/ip) with its firewall/VPN (the IP series) appliances. Over time, we expect both companies to deploy an integrated iTCM and Internet security solution as a single platform. Nokia also intends to resell FFIV’s solutions for use with its next generation IP-based wireless infrastructure, although we expect that will occur later over time. Nokia should provide substantial distribution capabilities for F5, especially in conjunction with Nokia’s IP appliance line. We estimate that Nokia’s IP appliance line generates roughly $300-$350 million of revenue for Nokia. F5’s firewall, VPN, and server load balancing solution should enable Nokia to further increase the high availability and scalability of its Internet security appliances. For example, customers should be able to use pair of F5 load balancing appliances to ensure the high availability of clustered firewall/VPN appliance deployments. This broad strategic partnership validates the strength of FFIV’s load balancing and content distribution technology. Nokia management evaluated a number of competing solutions from both public and private competitors before choosing F5 as its partner for iTCM solutions. Over the next several months, Nokia and F5 intend to pursue a number of joint technology initiatives, including secure network management, and applying Internet traffic management technologies to both mobile infrastructure and mobile content delivery applications.