Shares of Aruba Networks tumble despite solid 2Q

SUNNYVALE, Calif. (AP) — Shares of Aruba Networks Inc. tumbled more than 10 percent Friday, a day after the company reported fiscal second-quarter results that were slightly better than Wall Street expected but failed to impress investors.

THE SPARK: Aruba, which makes equipment for wireless network providers, said it posted a loss of $11.4 million, or 11 cents per share, for the quarter ended Jan. 31, compared with a loss of $2.8 million, or 3 cents per share, in the same quarter last year.

Excluding stock-option and other one-time items, the Sunnyvale, Calif. company said it posted an adjusted profit of $19.4 million, or 16 cents per share, for the recent quarter.

Revenue rose 35 percent to $126.3 million from $93.9 million.

THE BIG PICTURE: The profit topped the average of analysts' estimates by a penny. A FactSet poll showed they expected a profit of 15 cents per share on $125.2 million in revenue.

In its conference call with investors, Aruba officials said they were pleased with the quarter's results. They pointed to the steep jump in revenue and noted that the company added 1,500 new customers during the period.

THE ANALYSIS: Jefferies analyst George Notter kept his "Hold" rating on Aruba shares and said the second-quarter results represented "business as usual" at the company. Notter raised his price target Aruba by $1 to $22. He said the company continues to perform well, but its shares have reached their fair value.

JMP Securities analyst Erik Suppiger backed his "Market Outperform" rating and $30 price target for the company.

"We believe Aruba Networks is well positioned to capitalize on the broad adoption of mobile data devices in the enterprise and margins continue to expand," Suppiger wrote in a note to investors.

THE SHARES: Down $2.64, or 10.7 percent, to $22.01, in afternoon trading. They dropped as low as $21.88 earlier in the day.

Over the past 52 weeks, the company's shares have traded between $16.20 and $36.40. Aruba shares are up about 19 percent since the start of the year.

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A Push for Clean Energy Despite Expected Resistance on Hill

President Obama’s fiscal 2013 budget asks Congress to increase spending on renewable-energy projects by about $500 million—almost the same amount the Energy Department lost on its failed loan guarantee to the bankrupt solar company Solyndra.

The proposed spending increase, which would take the Energy Department’s renewable spending up to $2.3 billion, compared with $1.8 billion in 2012—is a clear signal that Obama plans to push ahead with full-throated support of clean energy on the campaign trail, despite the Solyndra controversy.

That bump up is part of an overall increase in the Energy Department’s top-line request of $27.2 billion, up 3.2 percent from fiscal 2012.

“In light of the tight discretionary spending caps, this increase in funding is significant and a testament to the importance of innovation and clean energy in the country’s economic future,” the department wrote in its request.

Practically, though, the new clean-energy spending is dead on arrival on Capitol Hill, where election-year partisan deadlock has all but assured that Congress won’t even pass a budget this year. And even if it did, the Republican-controlled House would be sure to attack any fresh Energy Department spending on renewable programs.

Republican Ed Whitfield of Kentucky, who chairs the House Energy and Commerce Energy and Power Subcommittee, offered a preview of the proposal’s reception on his panel.

“The president delivered his 2013 budget to Congress today with more of the same failed policies he has pushed for three years,” Whitfield said. “This budget will increase taxes, does not provide a path to debt reduction, and will once again increase spending on failed renewable energy policies.”

It’s worth noting that while Obama was bold enough to ask for new clean-energy spending in the wake of the Solyndra controversy, the White House didn’t go so far as to ask for an increase in the same loan-guarantee program that backed Solyndra. The request for that program is cut from $2.1 billion to $1.7 billion. Instead, the funding will boost research programs; the agency’s Advanced Research Projects Agency-Energy program, which supports private-sector endeavors to research breakthrough energy technologies; and relatively noncontroversial programs such as efforts to boost energy efficiency in buildings and manufacturing.

Obama also asked for a boost in clean-energy spending in another corner of the budget—the Pentagon. The Defense Department asks for $1 billion for energy-conservation investments, up from $400 million in 2010, which would go toward energy-efficient retrofits of buildings and development of renewable-energy projects.

While Obama’s boost in proposed clean-energy spending may seem bold in face of the rain of criticism he knows will come from House Republicans, it represent a deeply scaled-down vision of his once-ambitious clean-energy agenda. Campaigning for office in 2008, Obama proposed a sweeping energy plan that would have budgeted $150 billion over a decade in federal clean-energy spending. By comparison, clean-energy advocates say that this year’s relatively paltry proposals won’t come close to scaling up the nation’s clean-energy economy to the size once envisioned by the Obama White House.

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Disney earnings beat despite shaky economy

(Reuters) - Walt Disney Co's quarterly revenue fell short of Wall Street's expectations after the movie studio put in a poor showing, but profit grew at a faster-than-expected 12 percent clip as media networks and theme parks held strong in an uncertain economy.

Disney shares fell 1.8 percent to $40.28 in after-hours trading.

The operator of television networks ESPN and ABC, a movie studio and theme parks, posted fiscal first-quarter revenue of $10.8 billion, a 1 percent gain from a year earlier. Analysts on average had expected revenue of $11.2 billion.

Analysts say the largest U.S. media corporation is searching for new ways to grow its ABC television unit.

The results came a day after news broke that Disney's ABC television unit was talking with Spanish-language broadcaster Univision about creating a 24-hour English-language news channel aimed at the growing Hispanic market in the United States.

Disney CEO Bob Iger would not comment on the reports during a conference call with analysts. But he said the company "has an interest in seeing that ABC News continues to flourish, and giving it an opportunity to look for and create some growth opportunities on its own."

Disney reported a fiscal first-quarter net income gain of 12 percent to $1.5 billion or 80 cents per share. Analysts on average had expected 71 cents per share, according to Thomson Reuters I/B/E/S.

Jointly operating a channel with Univision could help ABC reduce news-gathering costs, and offset flagging business. Revenue at Disney's broadcast unit fell 7 percent in the quarter to $1.5 billion.

Iger has made several moves to boost ABC's bottom line. In 2010, the unit shed about a quarter of its staff or 400 people. Long-time chief David Westin left that year, replaced by broadcast news veteran and "Charlie St. Cloud" author Ben Sherwood. Westin's departure was preceded by the sudden and unexpected resignation of ABC Entertainment President Stephen McPherson.

ABC News previously explored deals to partner with CNN or Bloomberg TV, but the talks never got off the ground.

ABC News also made eyebrow-raising moves like hiring Christiane Amanpour in the wake of the employee cull at a reported $2 million to $3 million to anchor Sunday political talk show "This Week."

She left that post late last year and now divides her time between reporting for ABC and CNN.

MOVIE STUDIO DECLINE

The company also has been trying to boost the movie studio's performance. Chief Financial Officer Jay Rasulo said the 16 percent drop in quarterly revenue to $1.6 billion reflected the company's strategy of reducing the number of films it produces to help build profits.

Operating income at the studio grew 10 percent.

Disney had a surprise hit in the quarter with modestly budgeted film "The Muppets", but suffered from tough comparisons with hits "Tangled and "Tron: Legacy" a year earlier.

Revenue at media networks, the company's largest unit, gained 3 percent to $4.8 billion with growth at sports powerwhouse ESPN and the Disney Channels.

The theme parks unit, which like media networks have held up through a struggling economy, rose 10 percent to $3.2 billion. "Disney continues to exhibit pricing power, which shows the strength and competitive advantage of that business," Morningstar analyst Michael Corty said.

The company will launch Disney's fourth cruise ship -- the Disney Fantasy -- in March. The new ship will not generate meaningful revenue until the fiscal third quarter, Rasulo said.

Analysts have pointed to uncertainty now surrounding the luxury cruise industry after Carnival Corp's Costa Concordia capsized off the coast of Italy. Rival Royal Caribbean Cruise Ltd has warned it will face a sharp drop-off in new cruise bookings because of that wreck.

Cases of the norovirus stomach illness also have been reported recently on two of Carnival's Princess cruise ships and one Royal Caribbean ship.

(Reporting By Lisa Richwine; Editing by Bernard Orr)

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