Out Fox The $treet

After recent weakness in the Wi-Fi solutions providers, do any of the stocks provide bargains now? Both Aruba Networks (NASDAQ: ARUN ) and Ruckus Wireless (NYSE: RKUS ) have been absolutely crushed recently while Ubiquiti Networks (NASDAQ: UBNT ) has been the lone winner in the sector. One big question is whether the big boy in wireless network gear, Cisco Systems has returned to reclaim market share in the sector. Through most of more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Aruba Networks ( ARUN ) has long been an interesting stock. The provider of next-generation network access solutions for mobile enterprises had a serial issue with diluting away the strong revenue growth. It reported Q2 2013 earnings that exceeded the market estimates, sending the stock higher in aft er-h ours trading. Previous research for this article (see Aruba Networks: Revenue Growth Disappears In Thin Air ) had suggested ignoring this stock until revenue growth actually flowed to the bottom line. Back then; the company had 34% revenue growth in the December 2011 quarter that lead to earnings only increasing from $0.14 to $0.16. Has management finally changed the tune to suit shareholders? Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclosure page for more details. 

Editors Choice When Ruckus Wireless (NYSE: RKUS ) went public in mid-November, the stock immediately crashed from an opening price of $15 all the way to close at $12.25 for an 18% loss on the initial day. A month later the stock has soared to a high of $20 highlighting the issues with the IPO market. The market for IPOs remains as arcane as decades ago with institutional investors blocking out individual more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Wireless providers around the world and especially in the US face a major issue with the massive data consumed by the new high resolution screen of the iPad3. According to the below Bloomberg video, users are blowing through data usage plans in only a couple of days. Wow! The real key is whether AT&T (T) and Verizon (VZ) can charge more for higher usage. More spectrum and capital spending will be needed to keep up with exploding demand, but what the industry really needs is pricing that keeps up with technology. Either develop a way to exponentially expand capacity or charge more for high data usage to slow down demand on the network. As mentioned by Derek Kerton, principal analyst at Kerton Group, users need to be pushed into using Wi-Fi when available such as at a coffee shop or even at home. At this point in the development of the industry, the goal can't really be to limit the wireless use of the iPad, but rather a wiser use of the available tools realizing that wirel...

Aruba Networks (ARUN) continues reporting strong revenue growth as customers latch on to the BYOD (bring your own device) enterprise wireless solutions. Unfortunately though, Aruba continues to struggle at turning that revenue growth into earnings per share growth. A main culprit is that shares outstanding continue to soar from 116.2M in Q2'11 to 120M in Q2'12. The company guided towards 122M in Q3'12. It remains very difficult to grow earnings per share with existing shareholders being diluted this quickly. Another issue is the Non-GAAP net income margin dropped from over 17% last year to slightly over 15%. Combined with the diluted share growth explains how a fast growing next generation wireless equipment maker only grows earnings from $0.14 to $0.16 in a year of 35% revenue growth. Strong technology companies typically see earnings jump over 50% with that growth as more revenue drops to the bottom line as the company gets larger. Read full article at Seeking Alpha. ...

After the close on Thursday, networking equipment stocks Juniper Networks (JNPR) and Riverbed Technology (RVBD) reported earnings that sent both stocks lower on Friday. One company missed estimates and focused on issues with carrier spending and the European debt crisis. The other exceeded estimates and talked about a product transition in Q1 leading to a major new product cycle. So which stock was down 18% and which one was down 3% at the close on Friday? That might surprise most investors who read the earnings reports and listened to the conference calls. Read the full article at Seeking Alpha. Disclosure: Long RVBD. Please review the disclaimer page for more details. 

Ciena ( CIEN ) soared after  reporting  an EPS beat and non-GAAP profits for the first time in several quarters. CIEN had a impressive mix of improved revenue combined with a reduction in operation expenses. The real question is whether this combination can last in the competitive environment. Ciena has long been a leading optical and networking equipment provider back to the internet bust in 2000. Since the bust, CIEN has had some good periods, but it has never been able to flourish. The company continues to make lower highs every 4 or so years with peaks around 2004, 2007 and 2011.  Read the full article on Seeking Alpha.  Disclosure: Long RVBD. Please review the disclaimer page for more details. 

According to a Gleacher analyst, Cisco Systems ( CSCO ) is expected to cut about 5,000 jobs  in August. That would be a massive 7% workforce reduction for a company with roughly 73,000 employees worldwide. According to the analyst, that reduction would be similar to large cuts the company took back in 2001 and 2002. Clearly those cuts were successful, or at the very least didn't preclude CSCO from being a dominant tech company in the 2000s. Read the full article at Seeking Alpha.  Update: According to Bloomberg and other sources the job cuts might actually approach 10,000 or double the original estimate. That number is even scarier as the problems are larger than originally thought. Productivity will be disrupted in a major way with that many people cut. Disclosure: Long CSCO and RVbD in client and personal accounts. Please consult an investment advisor about your individual position. This information is for informative purposes only and should not be construed as p...

After a few months of weakness since the  disappointing guidance  of F5 Networks ( FFIV ) back in mid January, most of the networking cloud stocks have been under pressure. It tends to be a normal pattern for new disruptive services to go through extreme highs followed by lows that shake out longs. The pattern will repeat several times over the next couple of years as cloud computing becomes mainstream. FFIV is now down 35% from its highs back in January. Have the future prospects really changed that much? Read the rest of the article on Seeking Alpha .  Disclosure: Long RVBD and RDWR. Please read the disclaimer page.