Riverbed shares rise on 2Q earnings, upgrades

Shares of wide-area data servicer provider Riverbed Technologies Inc. shares rose sharply in morning trading Friday, after two analysts upgraded the stock following stronger-than-expected second-quarter earnings.

The earnings report prompted two analysts to upgrade the stock.

Shares added $1.83, or 11.8 percent, to $17.41 in midday trading.

Late Thursday, Riverbed reported a net loss for the three months ended June 30 of about $869,000, or 1 cent per share, compared with a profit of $3.9 million, or 5 cents per share in the same period last year.

Excluding additional items, income was $9.9 million, or 13 cents per share compared with $11.7 million, or 16 cents per share, beating Wall Street estimates.

Revenue rose 51 percent to $81.6 million from $54 million last year.

Analysts surveyed by Thomson Financial forecast earnings of 11 cents per share on sales of $77 million.

The company said it gained customers and cut expenses. Operating expenses dropped 47.4 percent.

Wedbush Morgan Securities analyst Rohit Chopra upgraded the stock to "Buy" from "Hold," saying that upcoming product leases could fuel growth in 2009, that it is gaining a larger part of the market share from competitors such as Blue Coat Systems Inc. and that its guidance seems achievable.

Robert W. Baird & Company analyst Kenneth Muth upgraded the stock to "Outperform" from "Neutral" because it showed strong performance in the second quarter in a slow economic environment and new products could help it grow.

In a conference call Thursday, the company said it expects earnings of 14 cents per share in the third quarter along with a modest growth in sales in the range of $83 million to $85 million. Muth said the estimate was more conservative than the company had been in the past because of the financial climate.

The company raised its full-year financial guidance and expects earnings per share of 53 cents to 55 cents, up from 46 cents to 51 cents per share, on revenue between $329 million and $335 million, up from previous guidance of $315 million to $330 million.

Muth raised his estimate to earnings of 54 cents per share on $332 million in sales, from 46 cents per share on sales of $315 million, at the midpoint of Riverbed's guidance.