Extreme Networks (Nasdaq: EXTR) isn't looking too extreme these days.

The Ethernet networking specialist has seen its shares swoon by about 4% since reporting earnings this week. It was a respectable effort with 26% year-over-year sales growth and a $0.05 non-GAAP profit per share in contrast to the year-ago period's similar-sized net loss. Sales were strong across most geographies, but North American revenue was hampered by Extreme reorganizing its domestic sales force into a three-region structure.

From there, the news only gets worse. The company is selling more hardware and less of its services than it did last year, which is bad for margins. Hard-nosed competition from Cisco Systems (Nasdaq: CSCO), Alcatel-Lucent (NYSE: ALU), Brocade (Nasdaq: BRCD), and a host of other well-funded rivals is forcing Extreme to become the low-cost provider in order to close many deals, including a major opportunity in South Korea this quarter. That puts even more pressure on margins. And while earnings are doing better, Extreme's operating cash flows have taken a nosedive.

The company lacks the scale to truly compete with the likes of Cisco or Juniper Networks (Nasdaq: JNPR), is largely stuck supporting legacy Ethernet topologies in an era of optical and wireless networking, and generally looks like a poor fit for any but the most risk-happy and optimistic portfolio.

I don't make many "underperform" calls in our CAPS system, but I'm going there this time. I think Extreme Networks has seen its halcyon days, and I'm not even convinced that a deep-pocketed buyer of some sort would find the company's assets terribly attractive. This five-star rating out of five makes no sense to me. You can follow my all-star lead or cast the opposite vote in just a couple of clicks.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool has written calls (bull call spread) on Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.