Apparently Juniper reported weak results last night and said that business was slow, so people anticipated that Arista would disappoint too. This was helped by an analyst who warned the same thing. Arista dropped $17 or $18 today, I think. Then they reported after the bell, and knocked it out of the park.
Saul
Arista dropped $17 or $18 today, I think. Then they reported after the bell, and knocked it out of the park.
I couldn’t take advantage of the drop during the day, but bought in the after market lower than what it opened for the day. Increased my holdings by about 13%.
I listened to the call. Forecasting 40% growth for next quarter. Cloud Titans, their largest vertical, was a bit held back this quarter and they still grew 50%. Margin forecast that has a much tighter range and on the higher end of the prior ranges. The lower range has generally meant the company may incur more costs due to more domestic supply. They must feel a bit differently to offer a tighter range.
They seem to be dominating.
Take care,
A.J.
Based on the positive earnings, I won’t be surprised to see $205/share in the very near future…I maybe should have had more boldness and upped my call option offer price just before the close, but I didn’t want to give in too much to the emotions that were fueled by the drop from 3:45-3:53-ish.
I see right now that it is at $201.something in the pre-market, so $205 today should be almost a cinch, $210+ before the market closes wouldn’t surprise me.
Whatever entity caused the price drop just before close yesterday was probably engaging in some price manipulation and could have made a killing with some $185, $190, $195, or $200 strike November call options. I would suggest that at least a moderately small-scale SEC investigation might be warranted.
That other entity was Needham, and they were merely talking, in a probably a timely moment, about the elephant in the room in that Arista peer companies building out the cloud mostly either warned or had disappointing earnings, citing slowdowns and what not from the cloud titans and other customers.
Speculation was either that Arista was taking marketshare from these companies, or it would sink all boats including Arista. Arista reported that they too, had a slowdown with cloud titans, but not because of any reason of slowdown or competition but a longer certification process due to the patent work arounds.
Tinker
Based on the positive earnings, I won’t be surprised to see $205/share in the very near future…I maybe should have had more boldness and upped my call option offer price just before the close, but I didn’t want to give in too much to the emotions that were fueled by the drop from 3:45-3:53-ish.
I see right now that it is at $201.something in the pre-market, so $205 today should be almost a cinch, $210+ before the market closes wouldn’t surprise me.
Whatever entity caused the price drop just before close yesterday was probably engaging in some price manipulation and could have made a killing with some $185, $190, $195, or $200 strike November call options. I would suggest that at least a moderately small-scale SEC investigation might be warranted.
$205 as a cinch for today might have been a little over-optimistic…but still almost 4 more hours of the market being open today (regular hours).
Alex Henderson - Needham & Co. LLC
Thanks. I was just hoping you could clarify your comments. So on the one hand, you’re saying that the qualifications for the cloud guys has taken a little longer and is pushing business out of 3Q and then into Q4, and then, on the other hand, you’re saying that that’s not an impact on the numbers, and I’m not sure I understand what you mean by those two statements. They seem to be contradictory.
Jayshree Ullal - Arista Networks, Inc.
We’re saying that we didn’t do as well in the cloud titan in Q3 as we did in Q2. That’s what we’re really saying. But that doesn’t mean the other types of customers didn’t contribute to our number. So all five verticals did well, and it was very balanced. Cloud titan is still our number one vertical. So I don’t think they’re mutually contradictory statements. They’re actually connected, right?
Alex Henderson - Needham & Co. LLC
So if the cloud titans are…
Jayshree Ullal - Arista Networks, Inc.
(34:53)
Alex Henderson - Needham & Co. LLC
If the cloud titans are coming back in on the fourth quarter, and the other guys don’t change trajectory, why wouldn’t it accelerate in the fourth quarter then?
Ita M. Brennan - Arista Networks, Inc.
I mean we’re growing at, like, 50%, year-over-year, Alex, on a quarter-over-quarter basis. I don’t know that it accelerates off of that. I think Q3 we had some impacts and Jayshree has said it was a slight impact from the qualifications and so on. And we’ll see what happens in Q4, right? We have work to do there, and we’re working through that with them.
Alex Henderson - Needham & Co. LLC
Okay. Great. Thanks.
Little excerpt regarding the Needham’s question. Love the response from Ita.
Thought it was an amazing CC. Have a listen to it rather than read it. Very optimistic and positive. The CEO/CFO know their stuff.
Fighting2016 highlights the proud moments well.
‘The CEO/CFO know their stuff’ - but so did Alex Henderson, homing in on a woolly discrepancy. Kudos to him. (Never let management get away with an anomaly.)
I fail to see the “wooly discrepancy.” I think Henderson made a mistake here by ignoring the impact on of the other 4 verticals. The assumption that he is making is that if some of the cloud titan revenue gets pushed from third to fourth quarter, as the company suggest, then revenue growth will logically be even greater in the fourth quarter. But, that is not what the company is forecasting? Why? Probably bc they are sandbagging and being conservative. But, that is not what Ullal is saying. I think she is saying that people should not assume that all verticals will outperform again in Q4. It’s simple. Henderson is making an assumption, all verticals will continue the same rate of outperforming growth in Q4, so the cloud titan revenue will result in incremental growth. BTW, that will be exactly what ends up happening imho.
BTW, it was the same Henderson who wrote the warning note that tanked the stock. Using the results and warnings of Juniper and Oclaron as a possible harbinger of a potentially bad report from ANET suggests that he does not know ANET-positioning, offering-very intimately.
The assumption that he is making is that if some of the cloud titan revenue gets pushed from third to fourth quarter, as the company suggest, then revenue growth will logically be even greater in the fourth quarter. But, that is not what the company is forecasting? Why? Probably bc they are sandbagging and being conservative. But, that is not what Ullal is saying. I think she is saying that people should not assume that all verticals will outperform again in Q4.
On the other hand, here’s the paraphrased answer to a direct question. They are almost saying, "Of course we’re being conservative, but we’re talking 50% growth! What do you want? We have to give ourselves some lee-way.
Saul
Q - If the cloud titans are coming back in on the fourth quarter, and the other guys don’t change trajectory, why wouldn’t it accelerate in the fourth quarter then?
A - I mean we’re growing at, like, 50%, year-over-year, Alex. I don’t know that it accelerates off of that. I think Q3 we had some impacts and Jayshree has said it was a slight impact from the qualifications and so on. And we’ll see what happens in Q4, right? We have work to do there, and we’re working through it… [We’re being conservative].
From 11/3/2017 at 12:04 pm:Based on the positive earnings, I won’t be surprised to see $205/share in the very near future…I maybe should have had more boldness and upped my call option offer price just before the close, but I didn’t want to give in too much to the emotions that were fueled by the drop from 3:45-3:53-ish.
I see right now that it is at $201.something in the pre-market, so $205 today should be almost a cinch, $210+ before the market closes wouldn’t surprise me.
Whatever entity caused the price drop just before close yesterday was probably engaging in some price manipulation and could have made a killing with some $185, $190, $195, or $200 strike November call options. I would suggest that at least a moderately small-scale SEC investigation might be warranted.
$205 as a cinch for today might have been a little over-optimistic…but still almost 4 more hours of the market being open today (regular hours).
And here we sit not quite a week later, and Arista is at $218.50/share.
Had I been bold and bought the Nov. 17, 2017 $195 strike calls for something under $6.00 just before the market closed last Thursday via a market order rather than trying to get them for around $2.something (a price a bit above the then-listed bid), those would have $23.50 of intrinsic value with another week’s worth of time value (400-ish% gain, at minimum).
I mostly make this post as a reminder/lesson for myself…try to find the absolute best companies, and invest in those, maybe sprinkling in some options at times.
volfan,
I assume your are from Tennessee mate?
A sprinkling of options are fine. Or you can just buy a lot of the best companies and not worry so much. Is Arista really at $218?!? Holy moly it is at $220! I honestly have not really looked. I knew it went up. As Denny says, the stock market is not an escalator to the heavens, it is more like a wounded helicopter that eventually gains its bearings (if it does not crash before then). But might as well smile and enjoy it during times when you comfortably glide to the clouds.
One stressor removed from my life, at least for a little while. Trust me, even Arista or Nvidia, are going to bring us days of stress and angst in the future. But enjoy the moment. I remember when Nvidia was below $100 a share, and panic was ensuing. Always panic in the press, concerns, angst. Now it is over $200 and the press has not changed. Now we have the Intel menace. True, Intel is not a competitor I’d want to face off with. Then again, one would have said that about Cisco with Arista. The good thing about Arista, there simply is no news to worry about with Arista. They really don’t care much about publicizing themselves.
Shoot, last I looked ANET was $197 or so. Well, that is a good way to transition back to paying some bills, and sending more money into the brokerage. At some point something will catch my attention and I will start looking closer again. Until then, as part of my destressing campaign I am rationally applying the contribute each month and buy until such time I don’t feel like buying it anymore.
When it starts to crash I will let you know if I start fretting (sigh), but not today.
Tinker