Aruba reports record revenue, but losses soar

Aruba reports record revenue, but losses soar

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On the day the Dow Jones Industrial Average continued its fall, by another 455 points, WLAN vendor Aruba Networks reported record first quarter revenues, but also a much higher net loss compared to a year ago.

Revenues for fiscal 2009 first quarter were US$52.4 million, up 12 percent compared with a year ago and 9 percent over the previous quarter. But the quarterly net loss was nearly US$6.4 million, up from a net loss of US$639,000 in the year-ago quarter.

The financial results were announced after trading ended Thursday. While Aruba's revenue held up, its stock has not. During the day, Aruba's share price ended at US$1.95, a decrease of about 8 percent for the day, and a big drop from its 52-week high of US$15.85. The stock had risen from about US$4.29 in mid-July to mid-August but has, with so many others, been dropping every since.

On November 14, the board of directors approved an array of cost-cutting measures. This included an unspecified number of layoffs, making Aruba the latest in a long line of tech companies cutting their workforces. The measures are designed to reduce operating expenses by about 10 percent. The company expects the measures to result in at least US$2 million in pre-tax savings in the second quarter, and US$5 million to US$6 million in the latter half of the fiscal year.

Aruba added 700 new customers during the quarter, bringing the total to 6,000. In a statement, President and CEO Dominic Orr said he was "cautiously optimistic about our year-over-year growth prospects even in the tougher economy." Education WLAN deployments have been the company's strongest vertical market.

The company has also made some big ticket acquisitions, especially Airwave Wireless, a WLAN management vendor, for US$37 million earlier this year.

At the end of the quarter, Aruba reported $108 million in cash-in-hand and short-term investments and no debt.

All of which might increase the company's appeal as a takeover target. There have been persistent rumors about a possible acquisition of Aruba, the only public WLAN vendor. The most recent speculation focused on Juniper. There have been persistent rumors that Aruba, the only one of the pioneering WLAN switch makers to go public, has been an acquisition target for one or another much larger network equipment maker. The most recent rumor involved Juniper.

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