Why F5 Networks' Latest Big Bet Will Keep Shareholders in Good Shape

Because the rise of cloud computing has pushed F5 Networks' (NASDAQ: FFIV) legacy hardware-based business into decline, the company's own transition to a cloud-based software model has become vital to its efforts to remain relevant.

Its fiscal first-quarter results confirmed it's making encouraging progress in that direction. And last month, F5 accelerated the pace of those changes with its largest acquisition ever -- it bought Shape Security for around $1 billion. The size of the transaction relative to F5's scale represents a risky bet -- but given the company's modest valuation, it also provides investors with an interesting investment opportunity.

F5's legacy business consists of selling hardware-based application delivery controllers (ADCs) that optimize the performance and security of computing architectures. These devices filter and distribute network traffic across server groups that host the applications users want to access.

Source Fool.com