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Aruba Networks Is Bouncing Back From 'Hurricane Cisco'

Stocks in this article: ARUN CSCO FFIV

NEW YORK ( TheStreet) -- After a disappointing 2013 that saw its stock drop 14%, mobile enterprise company Aruba Networks (ARUN) has gotten the new year started on the right foot.

There were doubts that the company could put the pieces back together after a couple of, well, tropical storms had an impact on revenue. The Street called it "Hurricane Cisco" (CSCO). But as as I pointed out, too much was being made of a near-term hiccup. Aruba was suffering from revenue growth, yes. But it certainly didn't warrant the one-day 40% decline in the stock.

Last week, all of that was forgotten as Aruba beat both the top- and bottom-line estimates.

Revenue for the fiscal second quarter rose 14% year over year, and 10% sequentially. Product revenue, which comprises of 84% of Aruba's business, advanced roughly 8% year over year and 8% sequentially. As much as I like Aruba's business, this area has always been cause for some anxiety; 8% growth for product revenue is solid, but it still represents a deceleration of close to 66% from the year-ago quarter -- albeit still good enough for a 5% beat.

[Read: Here's the Biggest Risk With Tesla's Gigafactory]

Service revenue was slightly better, up 15% year over year and by an impressive 41% sequentially. But that's not a level I would expect Aruba to hit every quarter.

While I never believed Aruba was as bad as the numbers showed last year, I won't be quick to think that a 41% sequential surge in service revenue immediately sends an "all clear" signal. Let's not take one decent quarter out of context.

Let's also not forget that during the conference call management cited a contract worth $2 million to implement a public-facing application for an unnamed enterprise customer during the quarter. Let's not be quick to assume this is going to happen every quarter. If service revenue were to post a sequential decline in the May quarter, we should already know one of the reasons.

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