Why Aruba Networks Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Aruba Networks (Nasdaq: ARUN) dropped today by as much as 11% after the company delayed filing its 10-K annual report with the SEC.

So what: The company said it needs "additional time" to assess the effectiveness of its internal controls over financial reporting, and also that it has identified deficiencies in its IT controls. The company's most recent quarter and fiscal year closed at the end of July, and Aruba has already announced its more pertinent digits.

Now what: Aruba doesn't expect that any of its previously announced financial results will see any adjustments as it completes its review of internal controls, and it says it should have the audited 10-K filed within 15 calendar days. While any deficiencies in financial reporting are always a risk, this may be an overreaction to scary keywords like "delays" and "deficiencies." Acknowledging any shortfalls is the first step to fixing them, and this episode is unlikely to affect Aruba's long-term business.

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