Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Fueled by Cloud Computing, F5 Soars

What a difference a year makes.

Twelve months ago, shares of F5 Networks (Nasdaq: FFIV  ) dropped like a rock on a disappointing first-quarter report. Fast-forward 52 weeks and you find the stock surging as much as 12.8%. This time, there's not just one strong report behind the jump -- but a solid series of outperformances.

F5's non-GAAP earnings landed at $1.03 per share, 22% above the year-ago period and 2% ahead of analyst targets. That's nothing new; the string of earnings beats actually goes back to and even beyond that dreary drop four quarters ago. In fact, you have to go back to fall 2008 to find the last time F5 merely met Street estimates rather than exceeding them.

Instead, the big story is the revenue surprise. Seasonal slowdowns didn't play out the typical way, mainly thanks to strong demand for a couple of recently introduced application-delivery products. The selling spiel for the VIPRION product range is that the system can grow as your business grows by plugging more networking modules and upgraded software into the central chassis. This flexible approach is clearly resonating with F5 customers.

The company's efficient networking focus isn't altogether unique. Citrix Systems (Nasdaq: CTXS  ) sells a software-based app delivery alternative to F5's mainly hardware-based solution, albeit without the performance advantages of specialized hardware. Brocade Communications Systems (Nasdaq: BRCD  ) plays the integrated hardware-plus-software game, but it's centered on data storage rather than centralized application delivery. The main head-to-head competitor across all of F5's markets is, of course, networking titan Cisco Systems (Nasdaq: CSCO  ) , but F5 is outgrowing Cisco by orders of magnitude and clearly stealing market share from its bigger rival.

In short, F5 remains a top-notch networking play on cloud computing, and you just can't get much hotter than that nowadays. This stock enjoyed a gangbusters 2010, but 2011 was pretty flat. Will 2012 be a return to grand old form? The company and stock are off to a fine start, but you need to add F5 to your Foolish watchlist to track the situation as the year goes on. And don't forget to brush up on the fantastic cloud computing opportunity while you wait for more news.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1761252, ~/Articles/ArticleHandler.aspx, 10/24/2016 11:20:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 4:00 PM
FFIV $118.76 Up +0.69 +0.58%
F5 Networks CAPS Rating: ****
BRCD $8.79 Up +0.10 +1.15%
Brocade Communicat… CAPS Rating: ****
CSCO $30.46 Up +0.31 +1.03%
Cisco Systems CAPS Rating: ****
CTXS $86.17 Up +0.97 +1.14%
Citrix Systems CAPS Rating: ****