NEW YORK ( TheStreet) -- Shares of Aruba Networks (ARUN) took a pounding on Tuesday when the network software company announced it had delayed filing of its full-year financial results with the Securities and Exchange Commission. While citing internal control issues, the company said it needed more time to confirm the accuracy of its accounting data.
As it stands, Aruba has 15 days to file and the company said not only does it expect to meet the time requirement, but it does not anticipate any adjustments to what it has already disclosed. While its assurance to investors does help to some extent, it is hard to ignore the new risk that this situation introduces. Investors sent the stock down more than 7%. Is this an overreaction or legitimate cause for concern?
The Recent Quarter
Aruba delivered a solid fourth quarter and closed out the year on a high note. If there were any disappointments, it was with its guidance. During the quarter revenue surged 22% from the same period of a year ago to $139.2 million. Aside from a 6% sequential improvement, it topped analysts' estimates of $136.8 million. The company continues to do well with its U.S. sales as it also grew 14% from the third quarter.
The company earned $22.1 million or 18 cents a share -- topping analysts' estimates by a penny. Equally impressive, its gross margin improved by 3 points and over 1 point better sequentially. For the full year, it reported a net loss of $8.9 million or 8 cents a share on revenue of $517 million. The company also ended the year with almost $350 million in cash, equivalents as well as other investments. Equally impressive is that it does not have any significant outstanding debt.
The company also announced its board of directors authorized a stock buyback program of $100 million. For its performance, the company's CEO, Dominic Orr offered this:
In the fourth quarter, we achieved our thirteenth consecutive quarter of record revenue, growing revenue 22% year-on-year and 6% sequentially. Our traditional core verticals performed well in the quarter and we saw continued growth among the general enterprise. We believe that demand for wireless LAN networks remains solid.
It's hard to disagree with this performance. But as noted above, its guidance didn't show that it was not shooting for the stars as its valuation might suggest. The company expects macroeconomic issues to continue to have an impact. Though it expects demand for its mobility products to continue, it is forecasting Q1 2013 revenue to arrive in the range of $141 million to $143 million -- representing an annual increase of 18% to 20% and 1% to 3% sequentially.