At a strategy session recently, F5 Networks marketing executive Bill Bremner used a striking image to illustrate the company's position...

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At a strategy session recently, F5 Networks marketing executive Bill Bremner used a striking image to illustrate the company’s position vs. its competitors: a man in an F5 hat being chased by three stampeding bulls.

“We’re ahead today but not for long,” Bremner’s slide warned. “The bulls are gaining on us. The horn is going to hurt like hell when it sticks us.”

The bulls in question are Cisco Systems, Juniper Networks and Citrix Systems, larger rivals chasing after the market F5 has led for networking equipment that makes Web transactions faster and more reliable.

The Seattle company has been enormously successful the past couple of years, with sales growth of more than 50 percent each quarter since June 2004. Its profit grew 17 percent last year, and it’s on track to grow that much or more this year.

In spite of its success, the company isn’t exactly a household name outside of the industry.

F5’s technology works behind the scenes as the vital plumbing that helps data travel smoothly and securely across the Internet. Known as application traffic management, it functions as a kind of virtual traffic cop for online transactions.

Airlines such as Alaska use it to help with online reservations. Banks rely on it for secure access to online accounts. Mobile data devices like the BlackBerry use it for Web browsing or SMS messaging. eBay uses it across infrastructure to balance heavy traffic.

F5 Networks

Founded: 1996

CEO: John McAdam

What it does: Develops hardware and software systems for delivering applications on the Web

Employees: 755 worldwide, including 380 in Seattle

Customers: Alaska Airlines, Microsoft, eBay, NTT, SAP

Competitors: Cisco Systems, Juniper Networks, Citrix Systems, Foundry Networks

Source: F5 Networks, Seattle Times

F5’s biggest customers include eBay, Microsoft and Japan’s NTT, according to Pacific Growth Equities.

As more and more business is conducted over the Internet, the market for application-management solutions is expected to grow to $2 billion during the next two years, Gartner Research forecasts.

F5 faces a challenge to maintain its leading position and its technological edge.

F5 and Cisco Systems have been the market leaders, though with slightly different products and approaches. While Cisco emphasizes hardware, with F5 “the secret sauce is software,” says Chief Executive John McAdam.

F5’s product is the most advanced on the market because it adds intelligence to network operations, reducing the amount of equipment needed and giving technology managers more control over how to route traffic, said Joe Skorupa, research director for enterprise computing at Gartner.

McAdam said F5 has been replacing 15 to 20 Cisco projects a quarter.

But deep-pocketed Cisco announced a plan last month to add application-management software to its product mix, which could be a more direct threat to F5.

And Citrix Systems has come on strong with new technology from its acquisition of privately held NetScaler last month. Juniper Networks and Cisco also made key acquisitions to advance their products.

“There are some large players entering the market that has been F5’s core focus for the last five years,” said Erik Suppiger, analyst at Pacific Growth Equities in San Francisco. “The competitive landscape is going to intensify.”

F5 has also hit some internal road bumps that could hinder progress. Its sales force for North America has had significant turnover during the past six months as that staff is reorganized in a drive to improve performance. In addition, F5 sales in Japan dropped 50 percent last quarter.

The company’s red-hot stock is cooling off. Its shares fell almost 20 percent Thursday after an earnings report that indicated slower sales ahead.

The stock has since stayed in that range, closing yesterday at $41.77, up 4 cents.

Pacific Growth Equities downgraded F5 stock Wednesday, saying the company’s days of hypergrowth are over.

“It’s our impression that they’re probably going to struggle to post the type of upside they’ve had in the past,” Suppiger said.

For now, F5 will concentrate on building up its brand, realigning its sales force and making strategic acquisitions to strengthen its product.

The company has overcome bigger obstacles before. When the Internet bubble burst, it shifted its entire customer base from dot-coms to large corporations and pulled itself out of a two-year slump.

It’s not ready to concede the fight to the bulls just yet.

“The bullfighter is this little guy,” said Kris Reed, a marketing manager. “All he does is pull out the red cape, and they just run on by.”

And, a colleague next to her chimed in, “We eat them.”

Kristi Heim: 206-464-2718 or