William Blair Initiates Coverage on Data Networking Stocks

November 21, 2008 12:05 PM EST

William Blair initiates coverage on F5 Networks (Nasdaq: FFIV) and Juniper Networks (Nasdaq: JNPR) with Outperform ratings; Cisco Systems (Nasdaq: CSCO) with a Market Perform rating; and Polycom (Nasdaq: PLCM) and Riverbed Technology (Nasdaq: RVBD) with Market Perform.

Analyst, Jason Ader, says, "We believe the combination of increasingly distributed enterprises, proliferating computing devices, and robust network traffic growth will continue to drive overall demand for enterprise networking equipment,” Ader said. “We forecast long-term growth of 5%-10% for the sector, with higher growth for several high-priority segments such as application acceleration. The movement of enterprise network hardware ‘up the stack’ represents the next stage of industry development, in our view, and should enhance the network’s strategic value among customers while preserving healthy industry gross margins of 60%-80%. While we believe the core drivers for enterprise networking are secular in nature, we recognize the near-term risks to growth from the deteriorating global IT spending environment."

Cisco Systems, Inc. designs, manufactures and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry, and provides services associated with these products and their use.

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