This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Aruba Networks Is Bouncing Back From 'Hurricane Cisco'

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.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs