With a renewed company focus and push with its Steelhead product line Riverbed should be able to meet their full-year guidance of 15% revenue growth. Reorganizing the saleforce based on specific products also makes sense and should help to meet sales numbers. The next six months will be a good test for Riverbed and with its stock down almost 30% YTD, there is a lot of room for growth.

I also liked the comments on the Cloud product mentioning good adoption with 30,000 pre-CS6 subscribers converted and 60,000 new users added in the second quarter. Also with 5,000 net new subscribers per week, it sounds like they are on track for their goal of 800,000 subscribers by 2015.

Short term dips could provide a good buying opportunity as Adobe’s subscription based services could provide a cheaper entry cost for subscribers who don’t have the cash to pay for its product up front.

1. Palo Alto is growing at a staggering rate

2. Net profit margin is very low for Palo Alto but not its not as big an issue as people are making it out to be. PAN is spending a ton of money to get its product out and nwo it has something to show for it. Besides Check Point, who has a crazy high profit margin, the other pure plays are only around 10%.

3. With SonicWall being acquired by Dell recently, I could see a company like Sourcefire or a private player like Barracude being acquired to bolster security networking at an OEM.

Attached numbers (excel) - PAN

Cisco, a world leader selling Ethernet switches, routers and other equipment has continued to benefit from a restructuring effort announced mid 2011 to improve slow revenue growth and improve competition from rivals Juniper Networks (JNPR) , Hewlett-Packard (HPQ) and Chinese competitor Huawei. Some fear of macro-economic head winds and competition from rivals could potentially derail Cisco, but Chambers has been cautious around this.

Since  a bad quarter a year ago, Cisco has had a couple of decent quarters and I think we will see another one this weekend. I’m not expecting anything huge, but guidance from Chambers has been low with benchmarks of 5-7% growth, I think Cisco can improve on that.

Beyond low GDP issues for Cisco and increased competition in the Ethernet Switching business (31% of revenue), recent CIO surveys have been favorable to Cisco. One of the big questions will be what will margins look like? The company has been aggressive with the competition and if pricing is going to stay competitive we could see a continued downward trend of gross profit margins. This could potentially be dangerous even if earnings beat.

Overall I see Cisco as being highly competitive and with over 30B in net cash I think they should be able to keep pricing competitive and improve on current products.

Aaron Rakers - Stifel Nicolaus – Analyst

Yes, thanks, and congratulations on a great quarter. Kind of sticking to the similar topic, on the drive discussion, you obviously outlined that the price differential between flash, and all the way down to near line SATA drives. Can you talk a little bit about the mix of those drive configurations, where we stand today, and where you expect to be a year from now? And also on top of that, how we should think about that, similar to the price discussion, the differential in the gross margin that EMC sees? Thank you.

David Goulden - EMC Corp – EVP and CFO

All right. In terms of — yes, right, you are right. Right now, when you look at what sit, what we ship in size arrays, the majority, the vast major part is between fiber and the SATA FAST type drives. Flash today, is a small single-digit percentage, but the outage goes in hybrid array, a little flash goes a long way. And what I mean by that is that, you could improve the performance of an array dramatically, by having maybe less than 5% of the capacity in flash, and using FAST software, moving those hot data sets into the high performing media types. So we see a small increase, and a steady increase going forward in the mix of flash. But we still think that the vast majority of capacity shipped for many, many years, is going to be fiber and SATA. Within there, a mix more towards SATA, and less towards fiber, but we think that’s pretty much how things play out. And then from a margin point of view, as Joe said, we’re fairly agnostic to the media type. In fact, different media types are in fact good for us, because we can offer more choices and more price points to our customers. And we are getting very broadly similar margins across those media types. So the mix shift in media is not going to have a material impact on our gross margins.

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