Tuesday, March 27, 2007

Calls of Note Part 6

- Piper Jaffray is very positive on F5 Networks (NASDAQ:FFIV) saying that following discussions with numerous F5 resellers, they believe demand for the company's products have been exceptionally strong in the U.S. during the March quarter, and they anticipate another solid domestic quarter for the BIG IP product family. Firm also believes F5's federal business in this geography remained stable and do not anticipate any meaningful deterioration from this vertical.

While they have picked up a few data points suggesting some pockets of weakness in EMEA, only 17% of F5's revenues come from there and the firm believes this small relative exposure will be dwarfed by the strength they are picking up on in the U.S.

Firm's channel checks in December revealed a robust pipeline, and they believe numerous deals were purposely pushed into the March quarter. This, coupled with recent channel checks, gives them a high degree of confidence that F5 will likely beat estimates and guide above consensus for the June quarter. F5's new high-end products are gaining momentum and the firm believes this trend will continue throughout 2007 due to the explosive growth in data center traffic. The BIG IP 8400 was introduced in March 2006 and should regain momentum this quarter. Reits Outperform and $100 tgt.

Notablecalls: For some reason FFIV was very weak in yesterday's session. Think this is what prompted Piper's call. Ideally, I see FFIV gapping lower and then squeezing higher.

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