For investors in a tech company like F5 Networks (Nasdaq: FFIV), whose business depends heavily on its ability to keep its products a notch above the competition's, not all customers can be considered equal. Those that tend to be at the bleeding edge of technology adoption, and thus act as trendsetters for everyone else, especially require close watching. And this fact, more than any other, is why I think investors need to tread carefully with F5 right now, in spite of its recent dip: From the looks of things, it's some of the company's most tech-savvy customers who are most responsible for its recent sales weakness.

To recap, after being one of Nasdaq's highest flyers in 2009 and 2010, F5's shares got clobbered in January after the company reported fiscal first-quarter 2011 revenues that were slightly below consensus estimates, and also provided lukewarm guidance (relative to Wall Street's expectations) for fiscal Q2. And just last Friday, its shares took another dive after William Blair analyst Jason Ader and Oppenheimer & Co. analyst Ittai Kidron warned that Q1 revenues could be light, based on what they've uncovered through channel checks. Ader is expecting F5's revenues to fall $5 million to $10 million short of the company's projections.

The glass-half-full view of F5's recent slowdown is that the company is merely going through some growing pains after witnessing a couple of years of breakneck growth. And so it's only a matter of a choppy quarter or two before the company returns to its fast-growing ways -- fueled by soaring demand for the company's high-margin application delivery controller switches, for applications such as cloud computing, server virtualization deployments, and mobile content. The problem is that it's some of the most aggressive adopters of F5's switches for such applications who appear to be pulling back orders.

Slower growth from key customers
Of the four biggest vertical markets that F5 sells its gear to -- telecom service providers, technology companies, financial services companies, and government agencies -- it was the telecom and financial firms whose orders came up short in fiscal Q1. These are two verticals in which companies don't invest in technology merely to support their businesses, but also often do so to differentiate their businesses. Whether it's a wireless service provider building out a new data center in order to support its data services, or a major brokerage house making a big server deployment in order to support its trading floor, these companies are more likely to go out of their way to find the best technology for their business needs. And that, in turn, often makes them gravitate toward technology leaders such as F5. According to Credit Suisse, F5's sales to telecom customers fell 11% sequentially in what's typically a seasonally strong quarter, while sales to financial firms grew by only 0.5% sequentially.

In addition, of the major geographic regions that F5 gives sales figures for, it was the Americas region (dominated by the U.S.) that showed the most pronounced deceleration in growth from recent quarters. Credit Suisse estimated that sequential revenue growth for the Americas declined to 4.2% in fiscal Q1, compared with 14.5% in fiscal Q3 2010 and 12.3% in fiscal Q4. Collectively speaking, American IT buyers have historically been at the vanguard of buying hardware from younger vendors with compelling technology instead of big-name incumbents. That's why F5 and other smaller firms with a technology edge, such as Riverbed Technology (Nasdaq: RVBD) and NetApp (Nasdaq: NTAP), continue to see a disproportionate share of their sales come from the U.S. -- long after they've built out their international sales forces and reseller networks. Thus, unexpected weakness in American sales growth could be a sign that the competition is beginning to put some pressure on F5.

Plenty of competition
And if this is true, which F5 competitors might be giving the company headaches? Cisco Systems (Nasdaq: CSCO) probably isn't one of them; CEO John Chambers admitted during Cisco's last earnings release that the company still has "work to do" in the ADC space. But Citrix Systems (Nasdaq: CTXS) has been making some headway with its NetScaler ADC line, and has been specifically targeting high-growth market segments such as cloud computing and virtualization. Radware (Nasdaq: RDWR), meanwhile, has made some noise with its ADC-VX platform. And a variety of startups, such as A10 Networks and Crescendo Networks, have been generating sales in this market as well.

I still think F5 is in the catbird's seat in the ADC space. The company is the hand-down market share leader and has done a great job of creating an end-to-end platform around its BIG-IP and VIPRION product families, through a combination of proprietary hardware and software, custom switching modules, and extensive support from third-party developers. I don't expect the bottom to fall out of the company's business anytime soon. But given what's known about the sources of the company's recent sales weakness, I think there's a good chance the competition is making life more difficult for the firm than it has in recent years.

And if that's true, then the sky-high growth expectations that Wall Street has set for the firm need to come down a little bit. At this point, a lot of the bad news may be baked in, but I wouldn't count on the company's shares to quickly return to their old highs either.