Arista's strong fourth-quarter results should help calm investor nerves about its ongoing lawsuit with Cisco, an analyst report suggested Friday.
Arista Networks Inc. reported net income of $30.3 million Thursday evening. Earnings per share beat Wall Street expectations at $0.53 a share, excluding stock option expenses. Revenue for the final quarter of 2014 came in at $173.5 million, up 51% compared to the same period the year before.
For the first quarter of this year, the company is projecting revenue in a range of $164 million to $172 million.
MKM Partners lauded the strong results in a research note Friday. The analysts are raising their EPS guidance for the first quarter from $0.29 to $0.38:
- Arista turned in a strong revenue and gross margins beat-and-raise, and the underlying fundamentals of the business look very positive. The results should help to alleviate investor concerns that the Cisco lawsuit will have negative revenue and GMs [gross margins] repercussions. We are increasing our 2015 and 2016 revenue forecasts slightly and raising our non-GAAP estimates significantly as a result.
This doesn't mean that the legal battle with Cisco, however, is just scotch mist. The networking giant launched a copyright and patent infringment suit against Arista in December. (See Cisco Slams Arista With Massive Patent & Copyright Suit and Arista Needs to Hang Tough as Stock Dives.)
Arista is projecting legal costs of $5 million to $7 million for the first quarter alone. It expects the lawsuit to be a multi-year process.
But continued strong quarters from Arista should help to fortify investors in this legal battle.
— Dan Jones, Mobile Editor, Light Reading