Updated from April 21

F5 Networks ( FFIV) pushed second-quarter revenue to a record $40.6 million and beat Wall Street's profit expectations by 2 cents a share, the networking company announced after the close on Wednesday.

Net income in the second quarter was $6 million, or 16 cents a share, compared to a profit of $800,000, or 3 cents a share, a year ago.

The earnings report got favorable reviews from sell-side analysts -- several raised estimates -- but on a day when techs were initially dragged down by semiconductor stocks, F5's stock was recently off $1.57, or 5%, to $30.26.

Analysts polled by Thomson First Call were expecting a 14-cent profit on sales of $38.6 million.

F5 sells products used to balance loads on traditional data networks and, more recently, wireless networks.

International sales, particularly to Japan, were strong, accounting for 45% of total revenue. CEO John McAdam, who recently returned from a round of partner meetings in Asia, said in an interview: "We definitely see signs of a recovery in Japan."

Looking forward to the third quarter, the company expects to earn a profit of 18 cents to 20 cents a share on sales ranging from $42 million to $44 million. Analysts polled by Thomson First Call were a 16 cents profit on sales of $40.76 million. Although the company did not give guidance beyond June, McAdam reiterated earlier statements that he expects sequential growth in each quarter of the year.

Once the slump in information technology spending began to ease early last year, F5 became a growth story. Its top line grew from $27 million to $36 million, a gain of 33%, between December 2002 and December 2003, while net income jumped from $520,000 to $3.8 million, or 2 cents to 11 cents per share.

One key driver has been the growth in the telecommunications industry.

Sales to telecos in March totaled about 18% of total revenue, roughly in line with the last several quarters.

Meanwhile, the company's products are getting favorable notice, particularly a new and more secure way to establish virtual private networks used to transmit corporate data. "The product is complementary to F5's traditional application traffic management technologies and it should enable the company to leverage its existing products," said Pacific Growth analyst Erik Suppiger. "We also believe F5's traditional traffic management technologies are gaining broader adoption and that the company is taking market share," he said in a note to clients. (Pacific Growth does not have a current banking relationship with F5.)

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