F5 Networks, Inc. (NASDAQ: FFIV) got killed as the network optimization company reported that non-GAAP net income was $0.88 EPS and revenue rose 41% to $268.9 million.  Thomson Reuters estimates were $0.83 EPS and $270.6 million in revenues.  As far as guidance, F5 sees income of $0.84 to $0.86 EPS on revenues of $275 to $280 million versus estimates of $0.85 EPS and roughly $281.1 million.  The after-hours sessions was very hard on F5 and on its competitors and those with overlaps.

F5 Networks shares fell by -22.3% to $107.82 and on a whopping 4,362,265 shares in the after-hours session last night.  Shares are indicated around $112.50 in the very early pre-market session.  Four competing and overlapping companies were hit very hard as well:

• Riverbed Technology, Inc. (NASDAQ: RVBD) -9.68% at $33.39 and 415,501 shares in the after hours.
• Blue Coat Systems Inc. (NASDAQ: BCSI) -7.95% at $27.80 and 82,604 shares in the after hours.
• Aruba Networks, Inc. (NASDAQ: ARUN) -5.8% at $22.90 and 75,493 shares in the after hours.
• Acme Packet, Inc. (NASDAQ: APKT) -5.68% at $53.34 and 90,074 shares in the after hours.

Juniper Networks, Inc. (NASDAQ: JNPR) is almost 4-times its size in revenue and almost twice its size in market cap and even it fell by -2.85% to $35.85 and 196,174 shares in the after hours.

F5 had risen close to 200% over the last year and it was recently was added to the S&P 500 Index.  Add in that its market cap had reached over $11 billion and it is not a huge shock that the stock is being pounded even if this may seem an overreaction.

Is this a true overreaction?  On the surface, yes.  If the market remains strong then the growth targets here will be deemed a bit of sandbagging the estimates.  If the market choppiness continues, F5 may still have a bit of room below.

We have actually seen two upgrades so far.  Gleacher & Co. raised the rating to Buy and Credit Suisse has raised the rating to Outperform.  It seems as though some are using this as an opportunity to get in after having missed the huge gains over the last year.

Without the effects of the pre-market and after-hours trading, the 50-Day moving average was $133.45 and the 200-Day moving average is all the way down at $96.03.  F5 was at $90 as recently as last October and its 52-week trading range is $47.11 to $145.76.

JON C. OGG

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