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What happened
Actions of Arista Networks (NYSE: ANET) declined on Friday following the first quarter results of the software-driven network company. Revenues were in line with analysts' estimates and the results were better than expected, but the company's expectations for the second quarter were disappointing. The stock was down about 14.6% at 12 pm. EDT.
So what
First quarter sales of $ 595.4 million were 26% higher than the fourth quarter of 2018. Non-GAAP earnings (GAAP) were $ 2.31, year and $ 0.24 higher than analysts expected.
Source of the image: Getty Images.
The company's forecast for the second quarter was not as impressive. Arista expects revenues of $ 600 million to $ 610 million in the second quarter, up 16.4% over the previous year and well below the $ 639.3 million expected by analysts.
The weakness of the forecasts is due to a demand deficit of the service provider and cloud computing solutions of the company towards the end of the first quarter. According to the forecasts of Arista, this trend will continue in the second quarter.
Now what
Jayshree Ullal, CEO of Arista, described the problem at the end of the first quarter during the call for results, while reassuring investors that it was a short-term problem: especially Cloud Titans. So, I would not read anything in those six weeks except, as I said, especially a Titan Cloud that specifically slowed and paused most orders in the second quarter. "
With Arista shares valued at more than 11 times annual sales and approximately 80 times GAAP earnings before the report was issued, no margin of error was allowed. A slowdown in growth, even temporary, frightened investors.
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