First, the bad news: Shares of network equipment maker F5 Networks (Nasdaq: FFIV) dropped more than 20% as soon as last night's earnings release hit the news wires, and then they fell even further in downright ridiculous after-hours trading volume. Also, F5's first-quarter sales fell slightly short of analyst estimates, landing at just $269 million.

Now the good news: That disappointing top line represented 6% sequential revenue growth and 41% higher sales year-over-year. Non-GAAP earnings shot past every estimate by nearly doubling year-over-year to $0.88 per diluted share.

The deferred revenue backlog grew 11% from last quarter to indicate solid demand for the company's service offerings, GAAP net income came in at $55.7 million, and operating cash flow was even stronger at $103 million. There really wasn't much wrong with this quarter.

In the words of CEO John McAdam, it was actually a record quarter in many ways: "Before we get too defensive, let's just remind ourselves we were at the top of our guidance range, very much at the top. This 40% revenue growth, cash from ops of $100 million, operating margin in the 38%, and they are record numbers for us."

The typical seasonal rush of "budget flush" orders from corporations at the end of their budget years didn't quite materialize, which explains the lack of blowout sales numbers. On the other hand, McAdam notes that many large deals may simply have been pushed into the next quarter instead.

All things considered, F5 is clearly outgrowing chief rivals Cisco Systems (Nasdaq: CSCO), Brocade Communications Systems (Nasdaq: BRCD), and Citrix Systems (Nasdaq: CTXS). Application delivery networks are a hot topic these days, and F5 is taking market share from its competitors. After today's haircut, the shares are back to just about where they were after blowing out the fourth quarter in grand style three months ago.

It's a richly valued stock with high expectations baked right into the price. In my view, the company continues to deliver and should climb right back from this slip -- which really was no miss at all.

I'm adding a mid-term "outperform" call on F5 to my CAPS portfolio as I don't see any signs of that share grab ending soon. You can follow along in just a couple of clicks, then add F5 to your watchlist to keep track of the company's progress.

Fool contributor and all-star CAPS player Anders Bylund holds no position in any of the companies discussed here. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Alpha owns shares of 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.