Why Infoblox Inc. Shares Crashed Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Infoblox (NYSE: BLOX  ) fell a jaw-dropping 41% early Friday after the automated network-control specialist released mixed fiscal third-quarter results and weak forward guidance, and announced the pending resignation of its CEO.

So what: Quarterly revenue increased 5% year over year to $61 million, which was at the low end of its guidance range for sales of $61 million to $62 million. That translated to a 26% decrease in adjusted net income to $3.8 million, or $0.07 per diluted share. Analysts, on average, were looking for lower adjusted earnings of $0.03 per share on higher sales of $61.65 million.

Worse yet, Infoblox expects current-quarter revenue of $60 million to $61 million, which should result in adjusted earnings per share of $0.00 to $0.02. Analysts had expected adjusted fiscal fourth-quarter earnings of $0.06 per share on sales of $66.6 million.

Infoblox is expected to turn in full fiscal-year revenue of $245 million to $246 million, with adjusted earnings per share of $0.30 to $0.32. Again, the midpoint of both ranges is well below analysts' model for fiscal 2014 sales of $252.6 million and earnings of $0.33 per share.

Finally, Infoblox said its president and CEO of nearly 10 years, Robert Thomas, has decided to leave the company. Thomas will remain in his current positions pending the appointment of a successor.

Now what: On Thomas' resignation, Infoblox board Chairman Michael Goguen stated, "While we would be pleased if he would continue as CEO, the board respects his desire to pursue other personal and professional goals."

Today's massive pullback might be an overreaction, but given its sluggish top-line growth and weak outlook, I still don't think shares of Infoblox look cheap at 36 times the next year's estimated earnings. Keeping in mind that those estimates are likely to creep lower as analysts dig through today's results, I have no intention of diving in on the drop.

Top dividend stocks for the next decade
Instead, why not put your money to work in dividend stocks? After all, dividend payers simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


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

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.

Be the first one to comment on this article.

DocumentId: 2977540, ~/Articles/ArticleHandler.aspx, 7/29/2014 1:56:10 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...


Advertisement