Jim Cramer: What the Plunge in Arista Networks Says About Cisco
The clouds just rolled in on Real Money Stock of the Day Arista Networks (ANET) - Get Arista Networks Inc. Report with the stock plummeting upwards of 27%.
Arista posted earnings of $2.69 a share on revenue of $654.4 million for the latest quarter. Analysts surveyed by FactSet had been looking for $2.41 a share, on sales of $653.3 million.
But earnings really weren't the problem. Arista lowered its guidance citing "sudden softening in Q4 with a certain cloud customer."
Arista Networks builds scalable, high-performance and ultra-low latency cloud networks and does business with both Facebook FB and Microsoft MSFT.
While Cramer said CEO Jayshree Ullal is a genius that built Arista from nothing, the company's "hiccup" with Facebook left analysts mystified.
"When analysts are mystified, like they were with GrubHub (GRUB) - Get Grubhub, Inc. Report earlier this week, that means sell," Cramer said.
In addition, Cramer added that the problems at Arista could be signaling problems at ActionAlertsPLUS.com name Cisco (CSCO) - Get Cisco Systems Inc. Report as well.
Catch his full take in the video above.
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