The 1 Number That Matters for Riverbed Technology Investors

The following video is part of our "Motley Fool Conversations" series, in which we talk about topics around the investing world. This time, Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova talks about the one number that stands out in Riverbed Technology's (NYSE: RVBD  ) troubling first-quarter earnings report.

Revenue came in $3 million lighter than expected as earnings met estimates. More importantly, management guided to just $0.21 to $0.22 in second-quarter profit on $193 million to $197 million in revenue. Analysts were expecting $0.24 and $202 million, respectively. Seven firms followed with downgrades, Barron's reports, and the stock promptly fell 28% as a result.

A strong report from peer F5 Networks (Nasdaq: FFIV  ) refutes fears that Riverbed's problems are common to the industry. Rather, the company is in the midst of introducing a new, more advanced product lineup to diversify its revenue base and better compete with rivals that possess entire portfolios of network-enhancing products, such as Cisco Systems (Nasdaq: CSCO  ) .

Riverbed has historically specialized in WAN optimization, using its "deduplication" technology to strip away excess when sending data across a geographically dispersed network and increasing speed and efficiency in the process. Customers love the idea. Will they like Riverbed's newest efforts as much? One metric will tell the story.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Riverbed Technology at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Riverbed Technology and Cisco Systems. Motley Fool newsletter services have recommended buying shares of Riverbed Technology and writing covered calls on Riverbed Technology. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On April 23, 2012, at 3:40 PM, naughtyguy wrote:

    You wrote: "A strong report from peer F5 Networks (Nasdaq: FFIV ) refutes fears that Riverbed's problems are common to the industry. Rather, the company is in the midst of introducing a new, more advanced product lineup to diversify its revenue base and better compete with rivals..."

    That makes me wonder which is "the compamy" in the midst of... F5 Networks or Riverbed? If you mean Riverbed, that raises the fear that without better future projections that they might not have much confidence in their new products??

  • Report this Comment On April 25, 2012, at 10:25 AM, TMFMileHigh wrote:

    @naughtyguy,

    Thanks for writing.

    >>That makes me wonder which is "the company" in the midst of... F5 Networks or Riverbed? If you mean Riverbed, that raises the fear that without better future projections that they might not have much confidence in their new products??

    Riverbed is introducing a number of new products. Not because it doesn't have confidence in Steelhead -- that wouldn't make sense; Steelhead is widely loved by customers -- but to serve a broader set of network needs and grow the business as a result.

    Hope this helps and Foolish best,

    Tim

    --

    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor

    Web: http://timbeyers.me

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