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Analysts and investors Wednesday shrugged off Arista Networks’ initial loss to Cisco Systems in patent-infringement litigation, expecting Arista to engineer “workarounds” by the time the decisions are finalized. By afternoon in the stock market today , the stock of loser Arista ( ANET ) was up almost 6% to near 61 after touching 61.79 earlier in the day, while winner Cisco ( CSCO ) stock was up marginally to near 23. Both had closed down about 2.7% after the “initial final determination” was issued Tuesday . International Trade Commission Administrative Law Judge David Shaw said Arista violated Section 337 of the Tariff Act 17 times, but declined to cite 15 other claims of violations that Cisco brought against Arista. The upheld claims involve one patent for externally managing router-configuration data with a centralized database and two patents for private virtual local area networks (VLANs). Shaw’s decision was foreshadowed by ITC attorneys in September. A parallel ITC case and two federal court lawsuits also are pending against Arista, which has filed a countersuit in one of the U.S. District Court cases and claimed an antitrust violation by Cisco in a lawsuit filed last week. “Arista expects to have workarounds ready for all of the infringing elements in a second-quarter software release,” wrote William Blair analyst Jason Ader in a research note issued Wednesday. “These workarounds will have to be approved by the ITC, but Arista management appears confident in this outcome and in minimal disruption to its business.” Likewise, Nomura analyst Jeffrey Kvaal noted that investors already had learned of Arista’s intended workarounds for Q2. “We retain our positive view on Arista shares and neutral view on Cisco shares,” he advised clients in a research note. Nomura maintains a buy rating on Arista with a 95 price target. William Blair reaffirmed a market-perform rating for Arista, akin to a hold rating. “Given the complexity of the legal arguments, the myriad suits and countersuits, and the wide range of potential outcomes, we prefer to stay on the sidelines for the time being, but we maintain a positive bias on Arista’s fundamentals, business momentum, and market position,” Ader said. Scalper1 News
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