Arista (ANET) - Deep Dive Post on S. A.

Excellent, long, thorough post.…


Saul, does the litigation concern you? It is a bit concerning to me.
But, otherwise, I am tempted to pick up a few shares.

I agree, a very good article. By all appearances, ANET has many attractive qualities, starting with their leadership. There’s a lot to like here, even despite the ongoing lawsuit with (and against) Cisco, as the author suggests.

Thank you very much for posting this, Saul.

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Saul, does the litigation concern you? It is a bit concerning to me.

It seems the analysts are not too concerned because Arista has already been working on workarounds.

One analyst states '“Conversations with customers indicate that customers are fine with the result, and do not see it as a material impact. Key customers in particular have been well briefed on the situation, and today’s results were as expected.”’


In addition, there was the following statement made by Marc Taxay, Arista’s General Counsel, in the Q3 2015 earnings call:

…To Jayshree’s point, we have actually developed, to greater or lesser degrees, design arounds for each of the patents in the event that there’s an adverse outcome. Some have been implemented already; others are in the process of being implemented and frankly, a big part of the litigation process, of course, is to understand the nature of the claims that are being asserted and so it’s a moving thing as we see how theses are litigated. I would expect significant effort in the first half of next year.



There is another article that talks about Arista’s move into the router space and competing even further with Cisco and Juniper - into their bread and butter.…

The industry is moving toward integration - meaning fewer vendors with broader offerings. I know I’ve talked about this marriage in the past, and with Arista’s move into routing it is making even more sense. From the article I linked above:

But the incumbent router vendors have been working for years on tight integration of packet and optical transport. Arista has some capabilities here, with its Spine Transit line card and relationship with Infinera, but Cisco and Juniper develop custom ASICs and silicon photonics specifically for packet/optical transport.

I see some sort of consolidation and pairing of the smaller vendors as inevitable. This is one move that just makes sense. It’s either become a big fish through M&A, or be gobbled yourself.