F5 Networks: Internet Quality of Service

I use Yahoo! frequently throughout the day. But on Monday, nothing seemed to
work. I actually thought it was a problem with my Internet Service Provider
(ISP).

Of course, being the premier Net company, Yahoo! was the first of many major
sites to get hit by hackers “denial of service” attacks. The fact is, the
Net is extremely vulnerable. It was originally a platform for the academic
community; now it is used for consumers to buy goods and companies to
manager their operations.

This week shows the importance of focusing on the need for “Internet quality
of service.” A company that is making a reality of this phrase is F5 Networks (FFIV).


The financials are impressive. Revenues surged to $19.2 million last quarter
from $2.7 million in the same period a year ago. The company is profitable,
showing an 18 cent per share (or $4.2 million) gain, which beat First Call’s
12 cent estimate. In the same period a year ago, the company suffered losses
of $2.2 million.

With F5, companies can better monitor their network traffic (the technology
is software based). So, when a user hits a Web site, the user gets quick and
reliable results. In the increasingly competitive world of etailing and
business-to-business commerce, having a stable Web presence is critical.

About 53,000 servers are being connected to the Net every month. This is
increasing the complexities of network management and, of course, making it
essential for products like those from F5.

F5’s technology uses so-called load balancing. That is, when data packets
hit a site, F5 software will determine which server can best handle the
traffic. It’s kind of like a traffic cop.

The company has a diverse customer base. In all, there are 1,175 customers.
The customers are big names, such as MCI WorldCom, RealNetworks and eToys.

Critical to the company’s success will be to quickly expand its product line
to its large customer base. So far, the company has done very well. There
are now four products. Although, its flagship product, BIG/ip, represents
70 percent of revenues.

Yes, there are tough competitors and F5 can stumble. But, with its surging
customer base and continued innovation, F5 has so far made the right moves.

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