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Austin Smith: Moving on to another company you cover closely, F5 Networks. What are we going to be looking at in this company in 2013? What are the important storylines?
Eric Bleeker: I'm going to have to say this with any IT company right now: fiscal cliff concerns. Okay, the fiscal cliff's over with. There is still the huge overhang of raising the debt ceiling. Until this is over with, IT budgets will remain constrained.
If you're an IT company that's thought of as a leader, that investors are paying more than 20X earnings for, you're going to get hit the hardest. The biggest constraint to F5 in the near term is something F5 can't control. If you're an investor, you just need to be aware of the macro conditions that are holding it back.
That's both a possible detriment in the near term, and a possible long-term boom, once we get past this [current debt ceiling stand-off] and some of that former spending comes back online.
Austin: Although we never advocate trying to time the market, this is a sector that we see moves in very cyclical high/low fashion. When you've got companies trading at premium multiples, it can be nice to sit on the sidelines and wait for them to fall back to earth a little bit.
When you've got a company like Cisco trading as cheaply as they are -- and Cisco mimics this in many ways -- there's not a lot of reasons to maybe justify paying that multiple right now, before those companies, like F5, have come back down to earth a bit, and are trading for more conservative levels.
Eric: Yeah. That is the point. Get them when they're trading a little bit more conservatively priced, because we can't really time these things. The fiscal cliff situation looked like it was about to bring everything under in October, and a lot of these stocks actually rallied throughout the fourth quarter, as the fiscal cliff situation was "heating up."
The key is, buy great companies when they're cheap -- I believe F5 is a great company -- and you'll be rewarded [at these prices].
A final point to look at with the company, after the fiscal cliff resolution early last week, telecom equipment providers just shot up. F5 saw its own nice jump. It's really been buoyed by great growth in the telecom space.
You haven't heard that from other companies. You look at some of the other -- Acme Packet or Sonus -- any of these companies that have been in the telecom equipment space in networking have gotten hammered. F5 has been really executing and doing great.
If the [macro] situation is resolved, that's actually kind of afterburner growth for them, if we can see heightened telecom equipment spending. Possibly an area no one's watching, but will give F5 that little extra incremental growth that gets investors back on board.
