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There are some F5’s you don’t want any part of…like a tornado:
…or the finishing hold by Brock Lesnar:
However, there is one F5 that I really really wanted to get a piece of. I bought F5 Networks, Inc (FFIV) (on Friday November 12) at 125.42. I will sell it in four to six weeks at 144.48. Here’s why I like FFIV:
Well..for one, you like that chart? So do a lot of other people. And they like the stock too. The stock is up over 150% in the last year. Sure, it’s PE of 66 is pretty high but this dog knows how to hunt. Even if earnings meet the feeble ANAL-ysts expectations, its forward PE will be a very reasonable 29.
F5 Networks, Inc. provides technology that optimizes the delivery of network-based applications, as well as the security, performance, and availability of servers, data storage devices, and other network resources.
What the heck does all that mean? Well if you asked Mick Jagger, he’d say, “Hey Hey You You Get offa my cloud”.
Cloud computing is Web-based processing, whereby shared resources, software, and information are provided to computers and other devices (such as smartphones) on demand over the Internet. Generally, cloud computing customers do not own the physical infrastructure, instead avoiding capital expenditure by renting usage from a third-party provider. They consume resources as a service and pay only for resources that they use. Many cloud-computing offerings employ the utility computing model, which is analogous to how traditional utility services (such as electricity) are consumed, whereas others bill on a subscription basis. Sharing "perishable and intangible" computing power among multiple tenants can improve utilization rates, as servers are not unnecessarily left idle (which can reduce costs significantly while increasing the speed of application development). So what this all means is that the internet basically replaces your personal computer. When it comes to technology stocks, investors love cloud computing.
Do you know someone with a smartphone? Well if you do, there’s an enormous chance that someday that person is going to be using cloud computing. If that person is using cloud computing then there is a very good chance that he will be benefitting from something that F5 Networks slapped together.
These application traffic management tools that FFIV makes are starting to become really important to customer’s requirements. They make networks less costly to manage and more efficient in traffic flow. The products that FFIV makes enable customer systems to direct and optimize application traffic in ways that their competitors cannot. Accordingly FFIV has the #1 position in these kind of Ethernet switch markets.
The Seattle-based company is at the center of the move to cloud computing, in which applications, storage and other services are in some far-off server that can be accessed from anywhere. It's also an important player in the rise of virtualization technology, which lets computer users better manage their memory and storage space. By directing and balancing Web traffic, F5's software and hardware products help applications run faster and smoother even as data centers move farther away. The trend is toward fewer but larger server farms.
Now look. I am going to be perfectly honest. I have no idea how all this stuff works. I have less of an idea of what F5’s products do. Thinking about how all of this computer stuff works just makes the wires in my brain fry. However, as bandwidth use continue to rise with the use of mobile smartphones and netbooks and Ipads, some big upgrades in wireless transport equipment is going to be required for our systems.
What I do know is that F5 has been named as one of Fortune’s fastest growing companies. I also know that trends in mobile computing are in their infancy and they are growing at hyperbolic rates. I also know that F5 is in the middle of all of this somehow. They are at the heart of a shrinking data-center market, a growing cloud-computing one and the boom in the Internet and mobile traffic. F5's strong position in data center hardware has placed the firm under the microscope, and there has already been talk of Hewlett-Packard buying F5.
One can speculate all they want. But I find it much simpler to deal with the facts. This company makes money and it is one of the few original “dot.com” survivors.
In October, F5 Networks, Inc. announced revenue of $254.3 million for the fourth quarter of fiscal year 2010, up 10 percent from $230.5 million in the prior quarter and 45 percent from $175.1 million in the fourth quarter of fiscal year 2009. For fiscal year 2010, revenue was $882.0 million, up 35 percent from $653.1 million in fiscal year 2009.
GAAP net income for the fourth quarter was $48.2 million ($0.59 per diluted share) compared to $40.5 million ($0.50 per diluted share) in the third quarter of 2010 and $28.4 million ($0.36 per diluted share) in the fourth quarter a year ago. GAAP net income for the year was $151.2 million ($1.86 per diluted share) versus $91.5 million ($1.14 per diluted share) in fiscal year 2009.
For the first quarter of fiscal 2011, ending December 31, the company has set a revenue target of $265 million to $270 million and a GAAP earnings target of $0.62 to $0.64 per diluted share. The ANAL-yst target is $0.80 to $0.82 per share on comparable revenues.
These targets are insanely low. Revenues and earnings have grown for 6 consecutive quarters and there is nothing going on in the market that’s going to make this stop. So $$$MR. MARKET$$$ sees the 2011 revenues at $1.3 billion which will generate earnings of $3.72/share. Let’s pick a PE in the middle of what it is (66) and what it will be (29)…call it 40. If you take my earnings projections of $3.72 and multiply it by the PE of 40, you’ll get a stock price of $148.80, which exceeds my target sell price.
Sometimes when I look at clouds I see a doggy or a horsey. But the boss of F5 sees a lot of other things.
F5 president and chief executive officer John McAdam said that during the fourth quarter the company continued to benefit from several key trends that drove demand for its products throughout fiscal 2010. "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," said McAdam.
"In general, Q4 was a strong finish to a strong year," McAdam said. "Barring another broad economic setback, the strength of our current business and our growing pipeline are encouraging signs that the positive trends that drove our business in fiscal 2010 will continue through fiscal 2011."
Well alrighty then. I’ll ride this F5 momentum into a pile of Ben Franklins.
I am HUGE!!!
$$$MR. MARKET$$$
…or the finishing hold by Brock Lesnar:
However, there is one F5 that I really really wanted to get a piece of. I bought F5 Networks, Inc (FFIV) (on Friday November 12) at 125.42. I will sell it in four to six weeks at 144.48. Here’s why I like FFIV:
Well..for one, you like that chart? So do a lot of other people. And they like the stock too. The stock is up over 150% in the last year. Sure, it’s PE of 66 is pretty high but this dog knows how to hunt. Even if earnings meet the feeble ANAL-ysts expectations, its forward PE will be a very reasonable 29.
F5 Networks, Inc. provides technology that optimizes the delivery of network-based applications, as well as the security, performance, and availability of servers, data storage devices, and other network resources.
What the heck does all that mean? Well if you asked Mick Jagger, he’d say, “Hey Hey You You Get offa my cloud”.
Cloud computing is Web-based processing, whereby shared resources, software, and information are provided to computers and other devices (such as smartphones) on demand over the Internet. Generally, cloud computing customers do not own the physical infrastructure, instead avoiding capital expenditure by renting usage from a third-party provider. They consume resources as a service and pay only for resources that they use. Many cloud-computing offerings employ the utility computing model, which is analogous to how traditional utility services (such as electricity) are consumed, whereas others bill on a subscription basis. Sharing "perishable and intangible" computing power among multiple tenants can improve utilization rates, as servers are not unnecessarily left idle (which can reduce costs significantly while increasing the speed of application development). So what this all means is that the internet basically replaces your personal computer. When it comes to technology stocks, investors love cloud computing.
Do you know someone with a smartphone? Well if you do, there’s an enormous chance that someday that person is going to be using cloud computing. If that person is using cloud computing then there is a very good chance that he will be benefitting from something that F5 Networks slapped together.
These application traffic management tools that FFIV makes are starting to become really important to customer’s requirements. They make networks less costly to manage and more efficient in traffic flow. The products that FFIV makes enable customer systems to direct and optimize application traffic in ways that their competitors cannot. Accordingly FFIV has the #1 position in these kind of Ethernet switch markets.
The Seattle-based company is at the center of the move to cloud computing, in which applications, storage and other services are in some far-off server that can be accessed from anywhere. It's also an important player in the rise of virtualization technology, which lets computer users better manage their memory and storage space. By directing and balancing Web traffic, F5's software and hardware products help applications run faster and smoother even as data centers move farther away. The trend is toward fewer but larger server farms.
Now look. I am going to be perfectly honest. I have no idea how all this stuff works. I have less of an idea of what F5’s products do. Thinking about how all of this computer stuff works just makes the wires in my brain fry. However, as bandwidth use continue to rise with the use of mobile smartphones and netbooks and Ipads, some big upgrades in wireless transport equipment is going to be required for our systems.
What I do know is that F5 has been named as one of Fortune’s fastest growing companies. I also know that trends in mobile computing are in their infancy and they are growing at hyperbolic rates. I also know that F5 is in the middle of all of this somehow. They are at the heart of a shrinking data-center market, a growing cloud-computing one and the boom in the Internet and mobile traffic. F5's strong position in data center hardware has placed the firm under the microscope, and there has already been talk of Hewlett-Packard buying F5.
One can speculate all they want. But I find it much simpler to deal with the facts. This company makes money and it is one of the few original “dot.com” survivors.
In October, F5 Networks, Inc. announced revenue of $254.3 million for the fourth quarter of fiscal year 2010, up 10 percent from $230.5 million in the prior quarter and 45 percent from $175.1 million in the fourth quarter of fiscal year 2009. For fiscal year 2010, revenue was $882.0 million, up 35 percent from $653.1 million in fiscal year 2009.
GAAP net income for the fourth quarter was $48.2 million ($0.59 per diluted share) compared to $40.5 million ($0.50 per diluted share) in the third quarter of 2010 and $28.4 million ($0.36 per diluted share) in the fourth quarter a year ago. GAAP net income for the year was $151.2 million ($1.86 per diluted share) versus $91.5 million ($1.14 per diluted share) in fiscal year 2009.
For the first quarter of fiscal 2011, ending December 31, the company has set a revenue target of $265 million to $270 million and a GAAP earnings target of $0.62 to $0.64 per diluted share. The ANAL-yst target is $0.80 to $0.82 per share on comparable revenues.
These targets are insanely low. Revenues and earnings have grown for 6 consecutive quarters and there is nothing going on in the market that’s going to make this stop. So $$$MR. MARKET$$$ sees the 2011 revenues at $1.3 billion which will generate earnings of $3.72/share. Let’s pick a PE in the middle of what it is (66) and what it will be (29)…call it 40. If you take my earnings projections of $3.72 and multiply it by the PE of 40, you’ll get a stock price of $148.80, which exceeds my target sell price.
Sometimes when I look at clouds I see a doggy or a horsey. But the boss of F5 sees a lot of other things.
F5 president and chief executive officer John McAdam said that during the fourth quarter the company continued to benefit from several key trends that drove demand for its products throughout fiscal 2010. "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," said McAdam.
"In general, Q4 was a strong finish to a strong year," McAdam said. "Barring another broad economic setback, the strength of our current business and our growing pipeline are encouraging signs that the positive trends that drove our business in fiscal 2010 will continue through fiscal 2011."
Well alrighty then. I’ll ride this F5 momentum into a pile of Ben Franklins.
I am HUGE!!!
$$$MR. MARKET$$$
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