Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
While not pure play peers, the stocks of Riverbed Technology (RVBD) and F5 Networks (FFIV) often trade in tune due to some business overlap. F5 Networks reported solid results last week, at which time the stock gapped up.
Meanwhile, both Riverbed Tech and Juniper Networks (JNPR) [more of a large cap in the group of networking stocks] reported last evening and fell on their face. F5, which JUST reported last week, is taking some damage in premarket (which is truly silly) but nothing like the damage that RVBD is facing. I’ve followed both these stocks for a very long time so it’s always bemusing to watch the earning reactions. Both are quality companies with lumpy quarters – unfortunately they are very difficult to ever hold through an earnings report because you can instantly be up or down 15%-20% the next morning. In this morning’s case it looks like -14% for RVBD shareholders as the stock is indicating sub $26. It looks like guidance is the main culprit.
Via AP:
- Riverbed Technology Inc.’s profit jumped 53 percent in the fourth quarter, aided by stronger growth for its products and support services.
- But during a conference call with analysts, management said it expects to see a first-quarter dip in the growth of the company’s Steelhead line as it introduces a new product platform. Management also said that the new Steelhead products, which speed the transfer of data across wide-area networks, would help drive growth later this year. But investors appeared to focus more on the prospects for a weaker first quarter, driving the San Francisco-based company’s stock down more than 13 percent in aftermarket trading.
- Riverbed, which provides virtualization and cloud computing services, said net income improved to $20 million, or 12 cent a share, in the three months ended Dec. 31. That compares with net income of $13 million, or 8 cents a share, in the same period last year. Excluding the impact of stock-based compensation, acquisition-related costs and other special items, Riverbed’s earnings in the latest quarter amounted to 25 cents a share. On that basis, the results beat analysts’ consensus forecast, which called for earnings of 24 cents a share, according to FactSet.
- Revenue grew 23 percent to $203 million from $165 million a year earlier. Analysts had expected $201 million.
- Management credited the revenue spike to strong enterprise sales in the U.S. and elsewhere. “The business has been executing well and fourth quarter revenue growth was fueled by strong enterprise sales in both the U.S. and EMEA [Europe, Middle East and Africa],” said Randy Gottfried, the company’s chief financial officer, in a press release Thursday. “Despite higher disk drive costs resulting from recent Thai floods, we reported strong gross and operating margins in the fourth quarter.
- For 2011, Riverbed earned $64 million, or 38 cents a share, compared with net income of $34 million, or 22 cents a share, in 2010. Full-year revenue climbed 32 percent to $726 million from $552 million the year before.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
