F5 Disappointed But NETFLIX & QUALCOMM Perform

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Jan 25 2007
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Okay, F5 Networks, Inc. (Nasdaq: FFIV, stock) made $22.4 million, or 53 cents a share (beats earning estimate of 47 cents), for the quarter ended Dec. 31, up from the year-ago of $15.2 million, or 37 cents a share. Sales rose 36 percent to $120 million from $88.1 million in the first quarter of fiscal 2006. However the company gave a lower guidance for the current quarter when it expects earnings between 44 cents and 46 cents per share on sales of $124 million to $126 million. Analysts are looking for second-quarter earnings of 62 cents per share on sales of $123.3 million.

Jefferies & Co. analyst Bill Choi said investors were expecting revenue figures to beat analysts’ estimates by a bigger margin, as the stock trades at a relatively high valuation of close to 30 times its forward earnings. Jefferies has a “buy” rating and a price target of $85 on the stock.
So, the stock price tumbled $4.60 or 6% on after-hours electronic trading – though my prediction of beating the earnings was right, it disappoints with its’ lower guidance. While option trading can be fun and excited, it can sometime spells disastrous – nevertheless, with sufficient time-value, I’m pretty sure this guy will recover given time. Depending on the pattern of the price movement, I might go with “Put Option” to make some profit to minimize my loss on the “Call Option”. Alternative I might convert my Call to a spread trade. So, one down two to go…

Netflix, Inc. (Nasdaq: NFLX, stock) – has repeatedly proved the skeptics wrong since it launched its online DVD rental service eight years ago when it announced a great earning result. Netflix said it earned $14.9 million, or 21 cents per share easily exceeded the average earnings estimate of 15 cents per share surveyed by Thomson Financial. Revenue for the period totaled $277.2 million, a 44 percent increase from $193 million in 2005.

The company attracted an additional 2.1 million subscribers during the entire year, bringing its customer count to 6.3 million through December. The stock price surged by $2.50, or 10.9 percent, in extended trading hour.

QUALCOMM Inc. (Nasdaq: QCOM, stock) – posted a 5 percent increase in fiscal first-quarter profits driven by strong sales for mobile phones that offer speedier Internet downloads. Qualcomm earned $648 million, or 38 cents a share, in the three months ended Dec. 31, up from $620 million, or 36 cents a share, for the same period last year. The latest result includes a charge of 5 cents a share for share-based compensation, a loss of 1 cent per share from its strategic investments unit, and a gain of 2 cents a share for tax adjustments from previous years.

Excluding those items, Qualcomm earned 43 cents a share, 1 cent higher than the consensus estimate among analysts polled by Thomson Financial. Revenues jumped 16 percent to $2.02 billion from $1.74 billion, buoyed by demand for so-called third-generation mobile phones, which offer faster Internet downloads.

For its fiscal second quarter, Qualcomm projected a profit of between 42 and 44 cents a share, compared with analyst estimates of 43 cents a share. It estimated revenues between $2 billion and $2.1 billion, about equal to analyst estimates of $2.1 billion. The stock climbed 91 cents or 2.36% in after-hours trading.

I didn’t open any position on Parexel International Corp. (Nasdaq: PRXL, stock) as there’re not much volume – a sign which I don’t like as I’ll be at the mercy of the market-maker. So while Netflix and Qualcomm make me money, F5 disappointed me – what a day.

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