Aruba Networks Inc. (ARUN, Financial) filed Quarterly Report for the period ended 2009-01-31.
Aruba Networks Inc. has a market cap of $252.2 million; its shares were traded at around $3 with and P/S ratio of 1.3.
On February 17, 2009, we commenced an exchange offer to allow certain of our employees the opportunity to exchange all or a portion of their eligible outstanding stock options for the same number of new options. Generally, all employees who hold options, other than our Section 16 officers and employees located in China, France, India or the Netherlands, are eligible to participate in the program. The exchange offer is currently set to expire at 9:00 p.m. Pacific Time on March 17, 2009. We expect to take a modification charge of approximately $3.5 million over the vesting periods of the new options. Assuming the exchange offer proceeds according to our planned timeline, this modification charge will be recorded as additional stock based compensation beginning in the third quarter of fiscal 2009. This modification charge is estimated assuming an exchange price of approximately $2.55 and that all eligible underwater options will be exchanged. The actual amount of the modification charge is likely to be different from the estimate provided above.
We recognized $6.1 million and $12.6 million of stock-based compensation for the three and six months ended January 31, 2009, respectively, and $4.1 million and $9.3 million for the three and six months ended January 31, 2008.
Inventory consists of hardware and related component parts and is stated at the lower of cost or market. Cost is computed using the standard cost, which approximates actual cost, on a first-in, first-out basis. We record inventory write-downs for potentially excess inventory based on forecasted demand, economic trends and technological obsolescence of our products. If future demand or market conditions are less favorable than our projections, additional inventory write-downs could be required and would be reflected in cost of product revenues in the period the revision is made. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventory write-downs amounted to $0.6 million and $1.5 million in the three and six months ended January 31, 2009, respectively, and $0.4 million and $0.5 million in the three and six months ended January 31, 2008, respectively.
We record a provision for doubtful accounts based on historical experience and a detailed assessment of the collectibility of our accounts receivable. In estimating the allowance for doubtful accounts, our management considers, among other factors, (1) the aging of the accounts receivable, including trends within and ratios involving the age of the accounts receivable, (2) our historical write-offs, (3) the credit-worthiness of each customer, (4) the economic conditions of the customers industry, and (5) general economic conditions, especially given the recent financial crisis in todays economic environment. In cases where we are aware of circumstances that may impair a specific customers ability to meet their financial obligations to us, we record a specific allowance against amounts due from the customer, and thereby reduce the net recognized receivable to the amount we reasonably believe will be collected. The allowance for doubtful accounts was $0.5 million and $0.6 million at January 31, 2009 and July 31, 2008, respectively.
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Aruba Networks Inc. has a market cap of $252.2 million; its shares were traded at around $3 with and P/S ratio of 1.3.
Highlight of Business Operations:
On November 14, 2008, as a result of the macroeconomic downturn, our board of directors approved a plan to reduce our costs and streamline operations through a combination of a reduction in our work force and the closing of certain facilities. The majority of the reduction in our work force was completed in the second quarter of fiscal 2009. The remaining reduction is expected to be completed in the third quarter of fiscal 2009. The reduction in our work force resulted in the termination of 46 employees worldwide, or about 8% of our global work force. Expenses associated with the work force reduction, which were comprised primarily of severance and benefits payments as well as professional fees associated with career transition services, totaled $1.1 million. Additionally, we closed facilities in California and North Carolina and incurred facility exit costs of $0.3 million as a result. We expect that these cost reduction efforts will result in a savings of approximately $2.0 million over the final months of fiscal 2009.On February 17, 2009, we commenced an exchange offer to allow certain of our employees the opportunity to exchange all or a portion of their eligible outstanding stock options for the same number of new options. Generally, all employees who hold options, other than our Section 16 officers and employees located in China, France, India or the Netherlands, are eligible to participate in the program. The exchange offer is currently set to expire at 9:00 p.m. Pacific Time on March 17, 2009. We expect to take a modification charge of approximately $3.5 million over the vesting periods of the new options. Assuming the exchange offer proceeds according to our planned timeline, this modification charge will be recorded as additional stock based compensation beginning in the third quarter of fiscal 2009. This modification charge is estimated assuming an exchange price of approximately $2.55 and that all eligible underwater options will be exchanged. The actual amount of the modification charge is likely to be different from the estimate provided above.
We recognized $6.1 million and $12.6 million of stock-based compensation for the three and six months ended January 31, 2009, respectively, and $4.1 million and $9.3 million for the three and six months ended January 31, 2008.
Inventory consists of hardware and related component parts and is stated at the lower of cost or market. Cost is computed using the standard cost, which approximates actual cost, on a first-in, first-out basis. We record inventory write-downs for potentially excess inventory based on forecasted demand, economic trends and technological obsolescence of our products. If future demand or market conditions are less favorable than our projections, additional inventory write-downs could be required and would be reflected in cost of product revenues in the period the revision is made. At the point of the loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Inventory write-downs amounted to $0.6 million and $1.5 million in the three and six months ended January 31, 2009, respectively, and $0.4 million and $0.5 million in the three and six months ended January 31, 2008, respectively.
We record a provision for doubtful accounts based on historical experience and a detailed assessment of the collectibility of our accounts receivable. In estimating the allowance for doubtful accounts, our management considers, among other factors, (1) the aging of the accounts receivable, including trends within and ratios involving the age of the accounts receivable, (2) our historical write-offs, (3) the credit-worthiness of each customer, (4) the economic conditions of the customers industry, and (5) general economic conditions, especially given the recent financial crisis in todays economic environment. In cases where we are aware of circumstances that may impair a specific customers ability to meet their financial obligations to us, we record a specific allowance against amounts due from the customer, and thereby reduce the net recognized receivable to the amount we reasonably believe will be collected. The allowance for doubtful accounts was $0.5 million and $0.6 million at January 31, 2009 and July 31, 2008, respectively.
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