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Stocks F / F5 Networks
|Subject: annual meeting notes (long)||Date: 3/22/2007 7:29 PM|
|Author: tktrimbath||Number: 1850 of 1870|
F5 Annual Shareholders Meeting 3/22/07
CAVEAT I am human and an amateur investor. Mistakes will be made by me, but the company and the SEC hold THE TRUTH. When in doubt, ask. If we are lucky, some other investor was there who can add their insights.
Congratulations to f5 for the frugality award. Once again they held the meeting in their building. Over the years (this is something like my fifth time there) the room has morphed from break room to conference room. I suspect that the foosball table was rolled back in shortly after we left the meeting.
There were seats for about 50-100 and only about 3 dozen people in the room. At least a dozen of them were officers and directors. A few more were employees helping out. That left a very small crowd of individual investors and institutional representatives. That is very small considering that it was the 10 year anniversary of a company that has a market cap around $3B. (Let's see - divide $3B by 35 and my share comes out to . . . Pity it doesn't work that way.)
This year was the first that they had demos. In proper frugal fashion, they had a blade server and their new product MONTREAL on typical plastic lab carts. The gentleman explaining them was very informative, low-key, and pleasant to talk with.
After I sat down, one of the officers even came over and introduced himself. They've noticed which shareholders come back each year and wanted to make sure we had a chance to talk to someone and to know that we were appreciated. It is a gesture that costs nothing and is a fine example of what Investor Relations can really mean.
As a consequence of these informal discussions I was pleased to learn of the simple things that mean a lot. The employees like their work and the company, and that the company growth is showing up in the fact that they are getting new buildings.
F5 usually holds the record for the shortest formal meeting, but a few items had come up. The chance for drama was averted as a shareholder proxy was dealt with agreeably prior to the meeting; so, some time was spent to acknowledge the concern and the resolution. They even gave the proxy initiator the mike for a while. It was nicely handled. For those interested in the details, it had to do with executive compensation. (Due to a recent move I didn't get the proxy materials at my new address, so I am sketchy on the details.)
Of about 39,000,000 shares, 95% were represented in the room. All remaining initiatives passed, though not by unanimous vote (80% for the board, 65% for the equity plan, and 95% for the auditors).
The CEO started the presentation with a video. It did a fair job of being informative about the company's products without being condescending. That is a tough balancing act. I don't know how the company uses the video, but then I don't understand marketing in general.
The CEO got back up and ran through the general presentation of the business and where it is going, with some ten-year insights thrown in.
Here's a quick run-down of the stats that I caught. (There were more, but I don't try to write down everything.)
year-to-year revenue growth 40%
year-to-year income growth 28%
gross margin 78%
cash and short-term investments ~ $500,000,000
market share Application Delivery Controller 33%
market share Advanced Platforms 60%
Dev Central members (social web site for developers ) - 13,000
Their products live in the space between the network and the applications. Because those two are usually designed and operated separately, f5 is able to sit there and optimize the liaison (my word) between the two levels of the Internet. This is a growing market and they feel that the addressable market is $3B (though I can't remember the timeframe).
Their goal has been to be the undisputed leader and their market share numbers suggest that they are the leader, though maybe not the undisputed one - yet.
I get the impression that the reason f5's products do so well is because they are designed more as a coherent suite, rather than a collection of boxes. While some of the recent acquisitions were hardware firms, some of that functionality is morphing into software. That way, f5 can sell a solution in one box instead of several. (In side conversations I learned that the early year sales were to the IT staff, but