"The revocation covers all Arista products," stated Mark Chandler, Senior VP, General Counsel and Secretary of Cisco. "This means that Arista has lost the authorization to import or continue selling its products in the U.S., or to import components to build those products."
Of course, Arista will almost certainly appeal the decision. But Wall Street analysts aren't sure exactly what kind of impact this may have to the business over the near term.
According to Barron's today, for example, Barclays' Mark Moskowitz, for example, "[I]t is important to highlight that even with the updated CBP ruling, Arista can continue to fulfill orders through domestic manufacturing sources with products that contain work-arounds. [...] Reason being, the company did not shift its manufacturing back toward international manufacturers after the initial ruling, in an effort to hedge against an unfavorable ruling in the 945 investigation."
Meanwhile, MKM Partner's Michael Genovese simultaneously reduced his price target on shares from $95 to $84, citing reduced profit margin expectations even as he believes Arista will likely continue to deliver industry-leading growth.
It's obvious this patent battle isn't over yet. But investors will need to wait for more color on the situation when Arista releases fiscal Q4 2016 results next month, assuming the company doesn't issue an informational press release before then. In the meantime, given this negative development and caution from Wall Street, it's no surprise Arista Networks stock plunged today.