Wednesday, January 27, 2016

Seeking Alpha: F5 Networks In Growth Purgatory

"My son, Here may indeed be torment, but not death" Dante Alighieri, Purgatorio Canto XXVII

As far as many tech investors are concerned, a company that cannot generate double-digit revenue growth might as well just take itself private. I could talk a lot about the double-digit growth in F5's (NASDAQ:FFIV) service business, as well as the strong margin it generates, but none of that is really going to matter unless and until F5 can perk up its product growth rate and its overall reported growth rate.

Unfortunately, that's not a simple process. The company's core application delivery controller market has most definitely slowed, software ADCs are worth less to the company than its traditional hardware ADCs, and product offerings in areas like security and diameter routing can't yet offset the impact. I can run numbers indicating that F5 is undervalued even if growth never again reaches double-digits (and, in fact, if long-term product growth is below 5%), but investors could have a frustrating wait before the Street embraces the value argument and/or the company restores its product growth performance.

Read the complete article here:
F5 Networks In Growth Purgatory

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