Startup Aruba Networks Moves into the Black

The wireless networking startup has its first profitable quarter, sources say.

If profitability is what distinguishes a startup company from a grown-up company, then Aruba Networks is growing up.

For its fiscal quarter ending on Jan. 31, the wireless LAN controller and access point maker had revenues that exceeded operating expenses, marking its first profitable quarter since it started shipping products in June 2003, according to sources close to the Sunnyvale, Calif., company.

In its last quarter, the company shipped about 1,300 wireless controllers and some 25 thousand access points, sources said.

Gross margins increased by 13 percent from the previous quarter, and revenue exceeded operating expenses by more than $1 million, sources said, adding that the company was able to raise its gross margins with sales of software application modules for its switches.

/zimages/3/28571.gifClick here to read more about Arubas enterprise network offerings for mobile workers.

Officials declined to comment on the companys profitability; Aruba is still a privately held company and as such is not required to report such things.

But they did confirm that Aruba has been winning large contracts lately.

"We shipped more units than we have ever shipped this last quarter," said Keerti Melkote, co-founder and vice president of product management at Aruba.

"Were getting many large enterprise deals that extend beyond a single campus," Melkote said.

Aruba was one of tens of companies that inundated the market from 2002 to 2004 with centralized wireless LAN management platforms.

For several months, Aruba and fellow Silicon Valley company Airespace vied for a leadership position in the wireless LAN switching startup space.

Wireless LAN hardware market leader Cisco Systems bought Airespace in Jan. 2005 as a way to enter the space itself. This made Aruba the leading startup in the space. And shortly after Cisco acquired Airespace, Aruba won a major contract to replace a massive wireless network on Microsofts campus in Redmond, Wash.

Now Aruba is in third place in the overall wireless LAN hardware market, according to a recent report from the DellOro Group, a technology consultancy in Redwood City, Calif. Cisco is still the easy leader, and Symbol Technologies is in second place.

"In big accounts theyre definitely a threat to the incumbent vendors," said Greg Collins, an analyst at DellOro. "Theyve invested a lot in their sales function and have been able to land big deals."

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