Investopedia: Guidance Sours High-Flying Aruba

Even though the actual numbers do not support it, it feels like the markets have been down at least 1% every day for weeks. Whether this is just another example of enough people buying into "Sell in May and go away" that it becomes self-fulfilling or not, the reality is that the market is in a shoot-first mood. 

When Aruba Networks (Nasdaq:ARUN) gave cautious guidance with its fiscal third-quarter report, it was tantamount to painting a bullseye on the derrière of shareholders and the market punished the stock in due course. With the dust starting to settle a bit, though, it is time to ask whether the long-term growth potential of this name merits the attention of risk-tolerant growth investors.


On its Own, Not a Bad Fiscal Third Quarter
In a vacuum with respect to guidance and expectations, Aruba's third quarter was pretty strong in many respects. Revenue rose 53% and surpassed estimates by more than the usual degree. Growth was again led by product revenue (up 58%), though 3% sequential growth in the U.S. is a bit of a concern - particularly in light of that softer guidance.


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