What Arista's Beat And Raise Report Means For Network Peers

JPMorgan's Rod Hall mentioned that the 4Q beat and 1Q guidance raise announced by Arista Networks Inc ANET has a negative implication for Cisco Systems, Inc. CSCO and a slightly positive one for Ciena Corporation CIEN.

Arista reported its 4Q revenue at $245.4 million, beating the consensus expectation of $241.2 million by about 1.7 percent. The company announced its 1Q guidance at $232-$240 million, which was also ahead of expectations of $233.1 million by 1.2 percent.

Arista cited robust cloud titan spending as the main reason for the solid numbers, while other segments were also relatively strong. Microsoft was a 12 percent customer in 2015.

Analyst Rod Hall mentioned that the company is enjoying healthy acceptance of Tomahawk based products, following softer-than-expected 25G/50G deployments in 2015. Arista indicated that 2016 is likely to be critical for Tomahawk-based switches.

“We believe that cloud spending remains strong in spite of the headline capex misses in Q4. We believe this benefits mainly our companies who participate in the DCI market,” Hall wrote, while citing Infinity Pharmaceuticals Inc. INFI and Ciena. He added that this “should also be good news” for companies like Corning Incorporated GLW and Commscope Holding Company Inc COMM, which “we believe sell cabling systems to these large cloud players.”