Why Arista Networks Inc. Stock Dropped on Friday

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Lyons understands this, of course, and is putting up his fighting dukes. "Right now, it's put up or shut up," he said on a call with analysts.

The companies are fighting over a total of 12 Cisco patents, allegedly used by Arista's high-speed network switches without a proper Cisco license. Some of the claims have been dismissed in earlier decisions, but at least the five patents in front of the ITC this week live on. In Cisco's view, these patented features were brought over to Arista when former Cisco workers took new, high-ranking jobs at the smaller networking expert.

According to Cisco, they are not industry standards but important and unique innovations. Examples include a way to bundle multiple network links into one high-speed data stream, methods to upgrade switching software without interrupting the service, and a database that keeps an eye on the entire system's operations.

Arista shares now trade very close to 52-week lows, weighed down by these legal troubles but supported by an as yet unbroken string of impressive quarterly reports. The company went public in June 2014, and has exceeded Wall Street's consensus estimates on both the top and bottom lines in each of its five quarterly results releases.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early-in-the-know investors! To be one of them, just click here .

The article Why Arista Networks Inc. Stock Dropped on Friday originally appeared on

Anders Bylund has no position in any stocks mentioned. The Motley Fool owns and recommends Arista Networks. The Motley Fool recommends Cisco Systems. Try any of our Foolish newsletter services free for 30 days .We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More