Still Good Weather In Aruba

With the normal fall chill in the air in most parts of the country, Aruba seems like an increasingly pleasant destination. Tech investors seem to share that feeling, as Aruba Networks (Nasdaq:ARUN) has been an incredible performer over the past year. With this WLAN supplier having nearly tripled from its lows, it is fair to wonder how much gas is left in the tank. 

No Real Slowdown ... Yet
Aruba posted strong results for the fiscal first quarter, but analysts had been calling for precisely that. Revenue rose 44% on a year-over-year comparison and 8% sequentially. That is a little less growth momentum than in the prior quarter (where the top line grew 45% annually and 12% sequentially) but not significantly less. 

Below the top line, performance was once again good but not all that much better than expected. Gross profit rose 49% and gross margin did expand to 72%. That is above the company's target range and a function of new products as well as a higher mix of software. At the bottom line, on a non-GAAP basis, earnings more than tripled from the year-ago level.

The Road AheadAs Aruba is the No.2 player in WLAN (wireless networking for companies and large organizations), the spread of smartphones and tablets has to be a positive sign. When Research In Motion's (Nasdaq:RIMM) Blackberries started getting traction, there was a need for corporations to adjust their network and security needs to facilitate the technology. Now whether the device comes from Apple (Nasdaq:AAPL), Samsung, or Motorola (NYSE:MOT) and whether or not it runs Google's (Nasdaq:GOOG) operating system, there is the opportunity (and need) to access much more of the company network in an effective and secure way.

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