Citigroup analyst Walter Pritchard this morning initiated coverage with a Buy rating on shares of SourceFire (FIRE), the maker of computer network intrusion prevention software and hardware, writing that the explosion of mobile devices is increasing the need for “countermeasures” in cyber-security.

The competition, Cisco Systems (CSCO), Juniper Networks (JNPR), and McAfee, which Intel (INTC) just bought, is distracted, he writes: “Leader Cisco continues to have challenges and Juniper appears incrementally more network-focused. McAfee was an aggressive competitor in end-point and network security, but we already see early signs of execution woes. We expect these trends will benefit smaller, more focused players such as FIRE.”

SourceFire has upside as a take-out target, he writes, and he set a $32 price target. Pritchard started coverage of competitors Websense (WBSN) and Fortinet (FTNT) with a Hold rating, and price targets of $25 and $52, respectively.

Websense is having trouble executing lately, which means there may be little upside to Street numbers, he thinks. And Fortinet’s stock is rich, and expectations for the company are already high.

This morning, SourceFire shares are up $1.34, or 5%, at $26.42, Websense is up 23 cents, or 1%, at $24.49, and Fortinet is up 49 cents, or 1%, at $48.35.

Article courtesy of Tech Trader Daily

Shares of wireless networking equipment vendor Aruba Networks (ARUN) this afternoon are up $1.41, or 4%, at $34.10 $2.16, or almost 6%, at $34.86 in late trading after the company reported fiscal Q3 revenue and earnings per share that topped estimates.

Q3 revenue rose 53%, year over year, to $106 million, yielding EPS of 16 cents per share, excluding some costs. Analysts had been modeling $98 million in revenue and 15 cents EPS.

The company said demand was “strong” in all geographic areas in the quarter.

Aruba’s conference call with analysts is coming up at 5 pm, Eastern, and you can catch it here.

Article courtesy of Tech Trader Daily

As I wrote earlier, Cisco Systems (CSCO) was the subject of two downgrades this morning as the Street mulls the difficult work the company has ahead of it to fix its business.

The stock is currently down 93 cents, or 5%, at $16.85.

But it’s not all glum: there are some upbeat notes out there as well. In particular, I would note that folks are raising their EPS estimates this morning on cost-cutting expectations even as they take down their revenue numbers for Cisco for this year and next.

Brent Bracelin, Pacific Crest: Reiterates an Outperform rating and lowers his price target to $22 from $25. “Simplifying and streamlining Cisco’s operating model are now under way […] If 30% to 50% of these savings fall to the bottom line, EPS could be $0.04 to $0.07 higher.” And he raised his EPS estimates for this fiscal year to $1.61 from $1.59, and for next year to $1.75 from $1.72.

Brian White, Ticonderoga Securities: Reiterates a Buy rating and a $28 price target. “The combination of axing unrealistic financial targets and taking full responsibility for Cisco’s challenges over the past year, while outlining actions to simplify the company […] was a refreshing tone that we believe is setting up the early stages of a turnaround at Cisco,” writes White. “Given the combination of these steps taken by Cisco and a bottoming out in the company’s sales cycle, we believe value investors should now begin buying the shares.” White raised his full-year EPS target to $1.61 from $1.55, and for 2012, he raised his estimate to $1.74 from $1.70.

John Marchetti, Cowen & Co.: Reiterates an Outperform rating, though he thinks the shares are likely to be merely in line with the market “near-term” because last night’s remarks from the company “do little to answer questions on growth and margins.” “investors are unlikely to view the stock as cheap until visibility on growth improves and the company can outline a path to more stable gross margins.” He raised his EPS estimate for this year to $1.60 from $1.59, and to $1.78 from $1.75 for next year.

Brian Marshall, Gleacher & Co.: Reiterates a Neutral rating on the stock. “The company is a tanker ship that will require multiple quarters to fix its long-term financial model. Cisco continues to face margin pressure from smaller competitors […] such as Juniper Networks (JNPR), Check Point Software Technologies (CHKP), Riverbed Networks (RVBD), F5 Networks (FFIV), Acme Packet (APKT), Aruba Networks (ARUN), Fortinet (FTNT), Brocade (BRCD), etc.” Marshall raised his 2011 EPS estimate to $1.60 from $1.58, but cut his 2012 estimate to $1.68 to $1.71. On the plus side, Marshall notes that Cisco has “some of the most attractive secular growth opportunities in the information technology industry” in front of it, and that its “penetration” of its potential addressable market of perhaps $150 billion is just 30% based on revenue of $42 billion a year. He thinks Cisco’s “ace in the hole” are “vblocks,” data center capacity delivered as a “utility” through an “IT-as-a-service” model.

Article courtesy of Tech Trader Daily

Two days after announcing criminals may have stolen Sony’s (SNE) customers’ names, addresses, phone numbers and bank account information, the company’s CEO, Sir Howard Stringer, issued an explanation on the company’s Web site last night.

Addressing the break-in of the company’s online gaming network last month, and the subsequent shut-down of that network, Stringer said in his letter that the company was going to offer a month of free PlayStation network membership, once service is restored. Teams are working around the clock under the direction of the company’s consumer products chief, Kazuo Hirai, he said, to restore access.

Stringer responded to claims the company was slow to notify customers of what happened, explaining that the company shut down the network “as soon as we discovered the potential scope of the intrusion,” and said Sony had hired “some of the best technical experts in the field to determine what happened.”

Stringer said there was no confirmation yet that sensitive customer data had actually been obtained by the criminals.

“In the coming days, we will restore service to the networks and welcome you back to the fun,” said Stringer.

Article courtesy of Tech Trader Daily

Shares of networking equipment firm F5 Networks (FFIV) are jumping $6.60, or 6.6%, to $106.34 this morning after the company last night beat fiscal Q2 EPS estimates and offered a Q3 EPS view that topped expectations as well.

The stock had been under significant pressure leading up to the report, with analysts warning of weakness as a result of Japan’s disaster and a slowdown in federal spending on networking. The report seems to have put to rest worries about those issues.

But with an in-line quarter for revenue, and with earnings estimates for this year in a wide range, there was enough last night for both bull and bear to point to in the report.

On the bullish side, Brian Marshall of Gleacher & Co. riffs on the “BIG IP,” a product from F5, to make comparisons to rap musicians.

Just when the record producers doubted Christopher George Latore Wallace (aka The Notorious B.I.G., Biggie Smalls or simply Big Poppa), he went quadruple platinum on his first album. We can create a similar situation with the investment community and FFIV, as many have recently doubted the company’s ability to post solid results/guidance in the face of a challenging environment (i.e., Japan, telco/federal spending, etc.). We believe F5 possesses tremendous future growth potential through increased penetration of accounts (i.e., box loading), continued share gains, additional module sales,international expansion,etc.”

Marshall reiterates a Buy ratin on the stock and a $135 price target.

Likewise, Brian Modoff with Deutsche Bank reiterated a Buy recommendation and a $145 price target. F5 is “back in the saddle,” as far as he’s concerned. “A highlight of the quarter was the 68% year over year growth in Asia Pacific revenues,” notes Modoff. Modoff thinks the company will see better results as new products carry the company further into cloud computing: “s. We think that Victoria (likely in May/June) and TMOS 11 (likely in June/July) have the potential to meaningfully reaccelerate F5’s product growth rate in 2H/11 and into FY12+.”

Tim Long of BMO Capital reiterated an Outperform rating on the shares and a $140 price target, while raising his EPS estimate this year to $3.63 from $3.60. “F5 continues to see strong enterprise demand, and it closed more large deals in the quarter than ever before. As many investors feared the worst and expected the company to disappoint, we believe the company’s results and guidance serve as evidence that growth remains. F5 remains the networking company that is best positioned to benefit from the virtualization, cloud, bandwidth, and applications growth in the enterprise and service provider markets.”

The bears — and I don’t have all of their notes at this time — are largely unrepentant:

Jeff Kvaal of Barclays Capital, who had warned on Monday of a long-term trend in slowing growth at F5, today reiterates his “Equal Weight” rating on the stock. Kvaal thinks, “Qualitative commentary suggests F5 is poised to return to its pattern of beating and raising – though perhaps at a more modest clip given slowing sales growth.” Kvaal raised his EPS estimate for the year to $3.69 from $3.63, and raised his 2012 view to $4.58 from $4.45.

On the other hand, Brian White with Ticonderoga reiterated a Neutral rating today, after having cut estimates back on March 28th. Today, he’s unmoved from his bearish conviction. The company missed his gross margin estimate of 82.7% in the quarter, reporting 82.5%, instead. He cut his EPS estimate for the year to $3.78 from $3.82. White sees continued trouble ahead. “The big beats and raises that F5 delivered in 2010 may be a thing of the past. After a near-term rally, we believe the stock could be susceptible to another leg down, especially without the support of the upside momentum shown last year.”

Article courtesy of Tech Trader Daily

Nasdaq Composite futures are up 30.5 points this morning, at 2341.50 for the June contract, following a spate of positive results.

Intel (INTC), after a blow-out Q1 report last night and a blow-out Q2 forecast, was upgraded to Buy at both FBR Capital and JP Morgan.

IBM (IBM), Juniper Networks (JNPR), VMWare (VMW) and Yahoo! (YHOO) also all either met or exceeded estimates last night. Cree (CREE) was a disappointment, but doesn’t seem to be slowing down the party.

And then AT&T (T) met estimates this morning and EMC (EMC) slightly exceeded revenue estimates.

This morning, several names are higher:

Intel is up $1.47, or 7.4%, at $21.33; Juniper is up 3 cents at $38.50; EMC is up 22 cents, or 0.8%, at $26.94; VMWare is up $9.22, or 11%, at $95.19; Yahoo! is up 66 cents, or 4%, at $16.78;

Not everything’s up, however: AT&T is down 21 cents, or 0.7%, at $30.09; IBM is down $1.85, or 1%, at $163.55; Cree is down $1.31, or 3%, at $39.50.

Article courtesy of Tech Trader Daily

Envivio has filed to go public and raise as much as $69 million in a filing with the Securities and Exchange Commission.

The South San Francisco company specializes in video compression and internet protocol video networking technology. Its “TV without boundaries” technology enables service providers and content providers to offer high-quality video on the web. The company isn’t making money, so it seems like it’s trying to cash in on the frothy investment environment in Silicon Valley to raise some.

Among the parade filing for IPOs recently are Zillow, the real estate web site firm, and ZipCar, which went public last week.

Envivio’s rivals include Harmonic, RGB Networks and Cisco. The company has more than 220 customers in 50 countries. The company said that it generated revenue of $30 million, up from $16.3 million a year earlier. It reported a loss of $2.3 million, down from $9.2 million a year earlier. As of Jan. 31, 2011, the company had accumulated losses of $79 million.

Envivio said it plans to use the proceeds from the offering for working capital and general corporate purposes, including hiring more people. The company has raised more than $30 million from investors including PE firm HarbourVest and Crescendo Ventures. It has about $10 million in cash. The company was founded in 2000.

Tags: digital video, IPO, web video

Companies: Envivio

Article courtesy of VentureBeat » deals

Barclays Capital analyst Jeff Kvaal today reiterates an Equal Weight rating on shares of F5 Networks (FFIV), writing that the he is “not at ease” with the slowing growth the company is showing in revenue, nor with its 38% operating profit margin.

“We believe F5’s 40%+ hyper-growth phase has ended, as server virtualization matures and F5 presses into new but competitive markets,” writes Kvaal.

“Virtualization, cloud, and mobile data remain healthy long-term drivers of 20-25% growth – in line with F5’s consensus 2012 growth of 20%.”

The Street is modeling 25% growth in revenue this year, Kvaal is modeling 26.6%, for $1.21 billion in revenue this year, followed by 20% next year. However, he sees a possible “step down” in that growth rate, given that F5 gets 6% to 7% of revenue from Japan and 12% of revenue from government contracts. Government spending has been an issuing for networking, he notes, with a prominent warning about U.S. federal and state spending by Cisco Systems (CSCO) on its most recent conference call.

Moreover, the 38% operating margin is at risk given the company’s longstanding practice of increasing its headcount following sales growth, thus driving up operating expenses.

Despite the stock’s being much cheaper of late, Kvaal warns investors may still punish the shares:

We believe investors are unlikely to look through the Japan and federal concerns given last quarter’s weak results. In F1Q11, F5 was impacted by a book to bill below 1, increasing DSO’s and slower growth in the company’s core ADC market. We expect it will be increasingly difficult for the company to rebuild backlog and improve sales metrics in the face of these headwinds in the near term should they prove to be formidable.

F5 shares today are down $1.50, or 1.6%, at $93.19. F5 stock is off roughly 28% for the year.

Article courtesy of Tech Trader Daily

Shares of Netflix (NFLX) are down 2.9% at $228.11 in midday trading on  concerns that the merger between Level 3 (LVLT) and Global Crossing (GLBC) will hurt the movie streaming company.

Akamai Technologies (AKAM) and Limelight Networks (LLNW) typically compete with Level 3 to supply Netflix with elements of their streaming services.

Analysts say the acquisition of Global Crossing by Level 3 will lead to market consolidation, which could potentially give it more pricing power to pass on to consumers. This would, in turn, hit Netflix’s margins.

Netflix shares are down 3% at $227.94.

Akamai shares are down 2.6% at $36.38.

Limelight shares are down 2.6% at $7.11.

Article courtesy of Tech Trader Daily

Marseille Networks, a startup that makes it easier to design chip prototypes, said today it has raised $4.5 million in a second round of funding.

The Santa Clara, Calif.-based company is relatively rare as a chip company that successfully raised venture capital money. Chip startups are rare these days because it usually takes a lot of money to create a new chip and bring it to market. But Marseille is offering a way to bring down chip costs significantly.

Marseille is making its own line of consumer electronics chips. But it has also created the Virtual Silicon platform, which can be used by other chip companies or system companies to design their own chips. The platform lets engineers design chips in software and test features in real-time prior to fabricating the first chip. That allows for early collaboration with customers.

The company will use the money to kick off production of its own first line of consumer electronics chips — the VTV-1200 series of video up-converter chips, which make video images sharper.

The company has moved from development to production of its 65-nanometer chips with less than $12 million in overall investment. The Virtual Silicon platform uses a hybrid of hardware emulation (where one machine pretends to act like another) and software simulation, where a software program simulates the final product. By doing this kind of prototyping rapidly, big companies can work the kinks out of their designs early and get their products to market on time and at lower costs.

The Virtual Silicon platform also allows Marseille to build chips that have been tested and approved by consumer electronics manufacturers. That reduces the overall risks of manufacturing. Amine Chabane, chief executive of Marseille Networks, said the company reduces the risk and cost associated with making new chips.

Marseille was founded in 2005 and has 30 employees. Rivals include Marvell, Silicon Image, and Realtek. But Marseille says the Virtual Silicon technology helps its stand out from rivals. Investors include KMP and Kumpulan Modal Perdana Sdn Bhd.

Tags: chips, rapid prototyping

Companies: KMP, Kumpulan Modal Perdana Sdn Bhd, Marseille, Marvell, Realtek, Silicon Image

Article courtesy of VentureBeat » deals