"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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