Cisco Systems Gives Cautious Outlook, F5 Networks Comforts Investors

ciscoBy Cisco [Public domain], via Wikimedia Commons

F5 Networks, Inc. (NASDAQ:FFIV) held its annual Analyst & Investor Meeting in New York where the company stated its expanded vision for supporting applications and sorting out near term investors’ concerns, says a report from Cantor Fitzgerald analyst Brian J. White. Though Cisco provided a weak outlook, F5 looked much more confident, discussing “aggressively” hiring salespeople.

Weak demand from emerging market not a threat

A few days back, Cisco Systems, Inc. (NASDAQ:CSCO) noted that it was witnessing declining trends in the emerging markets, but F5 Networks, Inc. (NASDAQ:FFIV) stated that emerging markets contribute just about 7% of its bookings. It refuted the possibility of facing a tough time in the emerging market even though some “softness” in China was experienced by F5.

In the meeting, F5 mentioned its recently launched Synthesis Architecture for Software Defined Application Services (SDAS) with the tagline of “leave no application behind”.

“Synthesis will provide Software Defined Networking (SDN) partners with a growth tract in layers 4-7 and allow customers the ability to rapidly provision layer 4-7 services,” says the report.

F5 Product pipeline

The company also talked about its technology and product pipeline where it announced that the next TMOS will be released with the name of BIG-IP Vancouver v11.5.0 in the first half of 2014, with new features across all product categories. In the hardware segment, F5 focused on Victoria II Blade (next gen VIPRION 2000 series blade) to be launched in the first quarter of FY 2014, 2 slot/2U VIPRION (uses 2250 and 2150 Blades) in the first half of fiscal 2014 along with the Centaur Blade VIPRION 4×00 and Cerberus (4th gen VIPRION 4×00 Blade) in the future.

Recently, F5 Networks, Inc. (NASDAQ:FFIV) launched its biggest product upgrade in four years, which according to the analysts, will increase the product revenue growth that was estimated to decline by 10%, in the second quarter of fiscal 2013.

Cisco, F5 collaboration to strengthen

Analysts feel that Cisco Systems, Inc. (NASDAQ:CSCO) was discussed many times during the meeting, which indicates that the collaboration between both companies is getting stronger. Last week, Cisco stated that F5 was part of the ACI system. Analysts believe that F5 may be parallel to Citrix systems in terms of partnering with Cisco in the ADC market, which is a major change from few weeks ago.

Analysts are taking positive expectations from the Cisco-F5 collaboration as the latter continues to pursue Cisco’s ACE module installed base, which F5 expects to contribute $1-2 billion in revenues.

Analysts have a Buy rating on F5 Networks, Inc. (NASDAQ:FFIV) with a price target of $110.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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