Tuesday, October 26, 2010

F5 Networks Announces $200M Stock Buyback Plan

Did I read that correctly? Leading highflying networking stock F5 Networks (FFIV) just announced a $200M buyback while reporting Q3 earnings. Wow! FFIV has a forward PE of 30+ so its almost arrogant for management to presume the best use of cash is by buying back stock. Also, with a market cap over $8B this buyback won't provide much of a dent into outstanding shares.

The company continues to blow out numbers similar to favorite Riverbed Tech (RVBD) owned in our portfolios so it could be an indication of the 5-10 year growth plan they can envision. Still its a head scratcher unless they are just hoping to buy the next time the market corrects 20% on this stock. And it will happen.

Definitely something to watch! Details below from Briefing.com.



4:11PM F5 Networks beats by $0.07, beats on revs; guides Q1 EPS above consensus, revs above consensus; announces $200 mln share repurchase program (FFIV) 102.54 +1.71 : Reports Q4 (Sep) earnings of $0.79 per share, excluding non-recurring items, $0.07 better than the Thomson Reuters consensus of $0.72; revenues rose 47.8% year/year to $254.3 mln vs the $249 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.80-0.82, excluding non-recurring items, vs. $0.73 Thomson Reuters consensus; sees Q1 revs of $265-270 mln vs. $259.76 mln Thomson Reuters consensus. The company also announced today that its board of directors approved a new program to repurchase up to $200 million of the company's outstanding common stock. "As enterprises and other large organizations confront the new realities of today's global economy, they are turning increasingly to technologies that enable them to operate more efficiently and compete more successfully by giving them flexible, on-demand access to more resources while reducing overall costs. This shift is reflected broadly in the trend towards data center consolidation and the widespread adoption of server virtualization and new infrastructure models such as cloud computing... Within the past year, these trends have accelerated, and our products have been increasingly deployed as strategic points of control in new data center architectures, integrating disparate resources and managing the flow of traffic within and between data centers. In addition, we have continued to see growing demand for our products among service providers grappling with the proliferation of mobile devices, the explosion of mobile applications and the corresponding increase in mobile data traffic. As a result, our product revenues grew 12 percent sequentially in Q4 and 38 percent during fiscal 2010,"

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