Aruba Networks falls on poor Q2 guidance
Shares of Aruba Networks, Inc. (Nasdaq: ARUN), which delivers the enterprise network to users, have fallen to a new 52-week low on news of a disappointing second-quarter earnings forecast.
The Sunnyvale, Calif.-based company announced after the close on Thursday that it expects revenue for the second fiscal quarter ended Jan. 31 to be between $40 million and $41 million, while net income is expected to be break-even.
Twelve analysts polled by Thomson Financial were calling for revenues of $51.5 million.
“During the second quarter, we experienced a significant decrease in revenues in the Federal vertical in conjunction with the delay in the approval of the federal budget,” said president and CEO Dominic Orr in a statement. “We believe our Federal business will pick up in the second half of our fiscal year.”
“Aruba ‘bit the January-quarter dust’ for a variety of reasons,” wrote analyst Eric Kainer ThinkEquity Partners in a research note today. “However, we believe that Aruba will be seeing the positive impact soon from the main driver of WiFi growth going forward — voice.”
Kainer believes that WiFi adoption is headed for strong growth in the coming quarters, driven by T-Mobile’s launch of HotSpot phone and wireless router for home use.
Still, the analyst is reducing his fiscal 2008 revenue estimates to $180 million from $215 million. The 12-month price target has been lowered to $10 from $18.
The low stock price and the potential acceleration of WiFi adoption is leading Kainer to raise his rating on the stock to “Buy” from “Accumulate.”
Final financial results for the second quarter will be released on Tuesday, Feb. 26.
At 3:27 p.m. ET, shares of Aruba Networks (ARUN) were down $2.81, or 36%, to $4.95. The previous 52-week low of $7.51 was established on Feb. 7, while the 52-week high of $23.85 was touched on July 20, 2007.
