Aruba Networks Returns From Vacation

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After taking a break last quarter, Aruba Networks (NAS: ARUN) is returning to its earnings-rallying days. Shares are enjoying their time in the sun today, with the stock up as much as 18% today as of this writing after the wireless network equipment provider served up strong fourth-quarter results to finish off its fiscal year last night.

Fourth-quarter revenue tallied up at $113.8 million, jumping 47% from last year's $77.3 million, resulting in non-GAAP earnings per share for the quarter of $0.17. Revenue beat the Street's consensus estimate of $109.2 million while EPS was right on target.

The full-year picture is just as rosy: $396.5 million revenue, a 49% increase, turning into non-GAAP EPS of $0.59. Last quarter's concerns about gross margins should be alleviated, ticking up to 68.5% from 67.7%. The full-year gross margin showed even more of an improvement, rising to 69.1%.

Aruba CEO Dominic Orr cited growing market share at the expense of primary rival Cisco Systems (NAS: CSCO) , as well as a rapidly growing enterprise wireless LAN market, during the company's conference call with analysts. Total customer count grew by more than 1,500 -- a quarterly record -- to more than 15,500. The solid results are also attributed to particular strength in the enterprise and educational segments.

Valuation looks a little stretched with the company trading at 45 times free cash flow, compared with fellow networker Riverbed Technology's (NAS: RVBD) 27.4 and Cisco's 9.7, although there's a reason Cisco is cheap. This is the first full year the company has delivered a GAAP net profit, which is encouraging. I like where the company is going; I just wish the shares weren't quite so expensive.

At the time this article was published Fool contributorEvan Niuowns shares of Riverbed Technology, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Fool owns shares of and has created a bull call spread position on Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Cisco Systems and Riverbed Technology. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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