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Cisco Receives Adverse Ruling Against Arista in California
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Cisco Systems Inc. (CSCO - Free Report) recently received an adverse ruling in a copyright infringement lawsuit against close rival Arista Networks (ANET - Free Report) . The jurors at the federal court in San Jose, CA ruled that Arista did not commit any notable infringement on any Cisco patent and consequently, would not pay any damages.
Per Reuters “The jury found that Arista infringed some of Cisco's copyrights. However, jurors also said Arista proved that external factors, other than Cisco's creativity, dictated the design of Cisco's content.”
Cisco plans to appeal the jury ruling. The company had been seeking nearly $335 million in damages over patent infringement of its command-line interfaces. The lawsuit is one of the two cases the company filed in 2014 that accuses Arista of infringing 14 patents.
The ruling is particularly shocking for Cisco given the fact that it recently won a patent ruling against Arista at the U.S International Trade Commission (ITC). The ITC judge found Arista guilty of infringing Cisco’s two patents. The ruling is scheduled for a review over the next few months by the ITC. If found guilty, ITC has the authority to place a ban on import of Arista’s products in the U.S.
The rivalry between Cisco and Arista has intensified in recent years. Although Cisco holds more than 50% of the market share in the switching business, Arista’s meteoric rise has affected its top-line growth and profitability.
Arista was founded in 2004 by two former Cisco executives. Per Reuter’s data, the company’s annual revenue jumped 43% since its Initial Public Offering (IPO) in 2014 to $837 million at the end of 2015. Over the same period, Cisco’s total revenue increased 4.3% to $49.25 billion.
Notably, Cisco’s switching revenues increased 5.3% in fiscal 2015, but remained almost flat in fiscal 2016. Apart from Arista, the company’s switching business faces significant competition from the likes of Huawei, Hewlett Packard Enterprise (HPE - Free Report) and Juniper Networks (JNPR - Free Report) .
Stock Price Overview
Shares of Cisco have underperformed the broader Zacks Computer Networks industry on a six-month basis. While the stock has returned 5.8%, while the industry gained 6.5%.
The underperformance could be attributed to intensifying competition from several smaller players, slowing order growth from service providers and challenges in the emerging markets.
Notably, in the trailing six-month period, Arista, Juniper and Hewlett Packard shares have gained 34.4%, 23.2% and 25.3%, respectively.
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Cisco Receives Adverse Ruling Against Arista in California
Cisco Systems Inc. (CSCO - Free Report) recently received an adverse ruling in a copyright infringement lawsuit against close rival Arista Networks (ANET - Free Report) . The jurors at the federal court in San Jose, CA ruled that Arista did not commit any notable infringement on any Cisco patent and consequently, would not pay any damages.
Per Reuters “The jury found that Arista infringed some of Cisco's copyrights. However, jurors also said Arista proved that external factors, other than Cisco's creativity, dictated the design of Cisco's content.”
Cisco plans to appeal the jury ruling. The company had been seeking nearly $335 million in damages over patent infringement of its command-line interfaces. The lawsuit is one of the two cases the company filed in 2014 that accuses Arista of infringing 14 patents.
The ruling is particularly shocking for Cisco given the fact that it recently won a patent ruling against Arista at the U.S International Trade Commission (ITC). The ITC judge found Arista guilty of infringing Cisco’s two patents. The ruling is scheduled for a review over the next few months by the ITC. If found guilty, ITC has the authority to place a ban on import of Arista’s products in the U.S.
CISCO SYSTEMS Price and Consensus
CISCO SYSTEMS Price and Consensus | CISCO SYSTEMS Quote
Cisco-Arista Rivalry Intensifies
The rivalry between Cisco and Arista has intensified in recent years. Although Cisco holds more than 50% of the market share in the switching business, Arista’s meteoric rise has affected its top-line growth and profitability.
Arista was founded in 2004 by two former Cisco executives. Per Reuter’s data, the company’s annual revenue jumped 43% since its Initial Public Offering (IPO) in 2014 to $837 million at the end of 2015. Over the same period, Cisco’s total revenue increased 4.3% to $49.25 billion.
Notably, Cisco’s switching revenues increased 5.3% in fiscal 2015, but remained almost flat in fiscal 2016. Apart from Arista, the company’s switching business faces significant competition from the likes of Huawei, Hewlett Packard Enterprise (HPE - Free Report) and Juniper Networks (JNPR - Free Report) .
Stock Price Overview
Shares of Cisco have underperformed the broader Zacks Computer Networks industry on a six-month basis. While the stock has returned 5.8%, while the industry gained 6.5%.
The underperformance could be attributed to intensifying competition from several smaller players, slowing order growth from service providers and challenges in the emerging markets.
Notably, in the trailing six-month period, Arista, Juniper and Hewlett Packard shares have gained 34.4%, 23.2% and 25.3%, respectively.
Zacks Rank & Key Pick
Cisco currently carries a Zacks Rank #4 (Sell). Arista with Zacks Rank #2 (Buy) is a better-ranked stock in the sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>