The Zacks Analyst Blog Highlights: Aruba Networks, Ruckus Wireless, Cisco Systems, Hewlett-Packard and Citigroup

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Sep 16, 2014, 09:30 ET

CHICAGO, Sept. 16, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Aruba Networks Inc. (Nasdaq:ARUN-Free Report), Ruckus Wireless Inc. (NYSE:RKUS-Free Report), Cisco Systems Inc. (Nasdaq:CSCO-Free Report), Hewlett-Packard Co. (NYSE:HPQ-Free Report) and Citigroup Inc. (NYSE:C-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Wireless LAN Thrives, Global Vendors to Gain

According to a recent report by research firm IDC, the combined consumer and enterprise wireless local area network (WLAN) market grew 9.2% year-over-year globally in the second quarter of 2014. The global enterprise WLAN segment increased 7.7% over the prior-year quarter and the global consumer WLAN segment witnessed 10.9% growth from the year-ago quarter.

The strong growth of both enterprise and consumer WLAN markets has become a new growth driver for wireless infrastructure developers. Major vendors which are likely to benefit from this market boom include Aruba Networks Inc. (Nasdaq:ARUN-Free Report), Ruckus Wireless Inc. (NYSE:RKUS-Free Report), Cisco Systems Inc. (Nasdaq:CSCO-Free Report) and Hewlett-Packard Co. (NYSE:HPQ-Free Report).

WLAN provides network connection over a short distance. While a traditional LAN uses network cabling to provide network communications, WLAN makes use of wireless mediums such as radio or infrared signals to establish network communications. A WLAN can be set up using a device called "access point." The user can communicate with an access point using a wireless network adapter and can access the Internet.

A major thrust for the enterprise WLAN came from Latin America, which registered year-over-year growth of 35.4% in the discussed quarter. Brazil and Argentina leads the race in this region. Europe, the Middle East and Africa continue to grow at 20.7% year over year, on the back of strong demand from Western Europe.

The Asia Pacific region generated growth of 10.5% year-over-year due to strong showing in China, Japan and Australia. On the other hand, the enterprise WLAN market declined 1.2% in North America.

The consumer WLAN segment received a significant boost from the emerging markets of the Asia Pacific region, particularly from China. The Chinese consumer WLAN market registered a 36.9% growth in terms of revenues and a significant 81.3% in terms of unit shipment year over year. At present, after the U.S., China is the largest consumer WLAN market globally.

Citi to File OneMain Financial IPO by September End

Citigroup Inc.'s (NYSE:C-Free Report) consumer-lending business, OneMain Financial, is set to go public as the company is in the process of filing an initial public offering ('IPO') by the end of September. The company will also take into consideration offers from interested buyers for a possible sale of the unit, which is worth at least $4 billion. The news was first published by Bloomberg.

Why This Exit Plan?

The latest revelation follows Citigroup CEO Michael Corbat's announcement of the possible sale of this unit at an investor conference in May. Corbat revealed then that the company initiated the process and is weighing its options comprising selling the unit to a private equity firm, divesting it through public listing or a combination of both by the end of 2014 or early 2015.

OneMain Financial, which is part of the former CitiFinancial, is the biggest operating unit of Citi Holdings with around 1,200 branches, and focuses primarily on subprime loans. As Citigroup was hit hard by the subprime mortgage crisis, the planning to sell this unit is basically a precautionary measure to deal with any further crisis. The company has been taking several restructuring initiatives to make it as much problem-asset free as possible. On the other hand, the banking behemoth intends to focus more on core operations.

Corbat, in the conference, stated that the subprime business no longer is a strategic fit for the altered business track of Citigroup. He also mentioned that Citigroup previously explored the option to vend OneMain Financial, but did not get the right bid. As the unit garners decent earnings, the company might get an attractive price at present.

Bottom Line

Citi Holdings booked profit (excluding the impact of mortgage settlement) for the first time in second-quarter 2014 since its formation. Also, for the rest of 2014, Citi Holdings is expected to remain profitable.

Citigroup has already been shedding distressed assets from its Citi Holdings unit to boost earnings. Further, we believe the exit from OneMain Financial will provide some ease amid several internal setbacks. Also, the streamlining initiatives should bolster the company's capital position, reduce expenses and drive operational efficiencies.

Citigroup currently holds a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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