February 8, 2013
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of network gear maker Riverbed Technology (NASDAQ: RVBD ) plummeted 18% today after its current-quarter outlook missed Wall Street expectations.
So what: Riverbed's fourth-quarter results managed to meet estimates -- EPS of $0.29 on revenue of $237 million -- but downbeat guidance for the first quarter reinforces recent concerns over its long-term prospects. Specifically, the company's WAN Optimization business just isn't growing as fast as the company's seemingly lofty P/E requires, forcing analysts to recalibrate their expectations yet again.
Now what: Management now sees first-quarter EPS of $0.23-$0.24 on revenue of $257 million-$266 million, below the consensus of $0.26 and $265.3 million, respectively.
"Looking ahead, we will benefit from continued growth in our WAN optimization business and performance management product suite," Chairman and CEO Jerry Kennelly reassured investors. "I am very optimistic as we enter our first year as a billion-dollar-plus revenue company."
With the stock now trading at a forward P/E of just 11, today's pullback might be a good opportunity to buy into that bullishness.
Interested in more info on Riverbed? Add it to your watchlist.