Aruba Networks Inc. (ARUN) fell the most in in more than five years after the maker of wireless-network equipment forecast quarterly results that trailed analysts’ estimates amid increased competition from Cisco Systems Inc. (CSCO)
The shares sank 26 percent to $13.10 at the close in New York, for the biggest one-day drop since February 2008. The stock has declined 37 percent this year, as the Russell 2000 Index gained 17 percent.
Aruba Networks gave the forecast yesterday and said on a conference call that it expects a “heightened level of competition.” Cisco, its biggest rival, is affecting the timing of the Sunnyvale, California-based company’s deal closings, Tim Long, an analyst at BMO Capital Markets Group in New York, wrote in an investor note today.
“Cisco bundling or cutting prices will likely lead to further share gains for them, and a tougher time for the smaller players,” said Long, who rates shares of Aruba Networks market perform.
Profit excluding some items will be 10 cents to 12 cents for the fiscal fourth quarter that ends in July, Aruba Networks said on the call. The company forecast revenue of as much as $150 million. The averages of analysts’ estimates compiled by Bloomberg were for earnings of 16 cents and sales of $152.8 million.
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