Aruba Networks Sees Strong Growth Across The Board

| About: Aruba Networks, (ARUN)

Components maker Aruba Networks (NASDAQ:ARUN) reported fantastic results for its fourth quarter Thursday afternoon. The firm grew revenues 22% year-over-year to $139 million, better than consensus expectations. Adjusted non-GAAP earnings per share increased 6% year-over-year to $0.18 per share, which was a touch better than the Street's consensus estimate. Management provided guidance for its first quarter of fiscal 2013, estimating sales of $141-$143 million, driving earnings of $0.17 per share, both figures in-line with consensus.

Aruba's strong results echo those of Cisco (NASDAQ:CSCO) as wireless network growth remains strong. Aruba's Wi-Fi products continue to stand out, while IT has noticeably shrunk in others areas, as evident from Dell (NASDAQ:DELL) and HP (NYSE:HPQ). With the explosion of data and data storage capabilities, as well as mobile devices, network strength and speed is becoming more important than ever, which certainly bodes well for the firm.

The company continues to grow strong across all geographies, led by Europe-Middle East-Africa revenues surging 48% year-over-year and comprising 16% of revenue during the fourth quarter. Management, however, is cautious about Europe going forward. Asia-Pacific/Japan revenues grew 34% year-over-year during the fourth quarter, and the firm sounds confident that growth in the region will be strong during fiscal year 2013. Soft IT spending in the United States didn't impact Aruba much, as revenue grew 14% sequentially and 15% year-over-year. Management is confident that the US will remain strong going forward.

Although the firm nearly doubled its full-year operating cash flow year-over-year, we aren't fans of the company at current levels. Shares trade near the high-end our fair value range, and, unlike competitor Cisco, it doesn't pay a dividend. After a substantial increase in its dividend, we think Cisco makes an attractive dividend growth investment and offers a substantially better risk profile than Aruba Networks. We are strongly considering the former in our Dividend Growth portfolio, though we have decent technology exposure already.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.