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Aruba Networks' Earlier Momentum Fades

Shares of enterprise network provider Aruba Networks have dipped in the red after surging on Friday.

(Aruba Networks story updated to reflect analyst commentary and stock price changes.)
NEW YORK (TheStreet) -- Shares of enterprise network provider Aruba Networks (ARUN) have fallen with the broader equity market after Friday's huge surge following the company's strong first-quarter guidance.

Aruba Networks issued per share guidance of 11 cents on revenue of $79 million to $81 million after reporting strong fourth-quarter earnings. Analysts on average were expecting earnings per share of 10 cents on revenue of $77.8 million.

Aruba Networks stock has fallen1.4% to $18.13 after shooting up 11.4% to $18.45 in Friday afternoon. More than 1.3 million shares of Aruba have changed hands vs. the three month average daily volume of 1.74 million.

On Friday afternoon, 5.6 million shares of Aruba had changed hands, compared with the three month average daily volume of 1.54 million.

"We remain positive on Aruba stock, as the company's robust growthtrajectory shows no signs of abatement even in the face of a deterioratingmacro environment," Goldman Sachs analyst Simona Jankowski told clients in an investor note earlier. "This was evidenced not only by the company's beat-and-raise, but also by a very strong new customer count of 900, above the 500 to 700 range of the last eight quarters."

Furthermore, Jankowski expects Aruba to continue to benefit from share gains, boosted by its recently announced OEM relationship with


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Meanwhile, BMO Capital Markets analysts have a market perform rating on Aruba following the company's quarterly report -- while raising the price target from $13 to $15 based on stock valuation.

Aruba recently announced an OEM agreement with Dell to deliver its secure mobility solutions to large enterprises, mid-market, healthcare, education and government markets under Dell's "PowerConnect W-Series Powered by Aruba Networks" brand.

Goldman Sachs has a buy rating for Aruba stock and maintains a 12-month price target of $20. Meanwhile, Needham maintains its buy rating for Aruba given its "continued growth trajectory," while raising its price target for the company to $20 from $16.

"We believe that Aruba's current business momentum will likely translate intoadditional upward estimate revisions," Needham analyst Greg Mesniaeff wrote in an investor note.

The company raised its guidance after announcing fourth-quarter earnings that beat the consensus estimate by a penny and higher-than-expected revenue amid the rapidly growing demand for wireless laptops, smart phones and other mobile device.

For the fourth quarter, Aruba Networks posted non-GAAP net income of $11.1 million, or 10 cents per share, compared with net income of $3.2 million, or 3 cents a share, in the year-ago period.

Revenue for the quarter was $77.3 million, an increase of 45% from the year-ago period.

The Wall Street consensus target for the quarter was 9 cents per share on revenue of $73.53 million.

Many analysts believe that Aruba will continue to grow at a faster rate than many of its networking peers, owing to the growing prevalence of wireless mobile devices in the government, healthcare and education sectors and the company's sharp focus on the wireless mobile space. Major competitors of Aruba include


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Meru Networks



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-- Written by Andrea Tse in New York.

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