Please ensure Javascript is enabled for purposes of website accessibility

Why U.S. Steel, Harmonic, and Riverbed Technology Tumbled Today

By Dan Caplinger - Jul 14, 2014 at 5:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Even though the stock market climbed today, these stocks missed out. Find out why.

Stocks generally posted strong gains on Monday, with major-market benchmarks falling just short of reaching new record levels. This morning's earnings news helped brighten investors' moods, as hopes that the second quarter would bring a big improvement over a winter in which harsh weather conditions produced tough conditions for many industries. The Dow scored triple-digit gains, but several individual stocks didn't share in the strength of the overall market. Among the worst performers were U.S. Steel (X 1.48%)Harmonic (HLIT 0.35%), and Riverbed Technology (RVBD.DL).


Source: U.S. Steel.

U.S. Steel sank 5% after the World Trade Organization said that import duties that the U.S. imposed on makers of steel in China and India were improper. Originally, U.S. Steel and other domestic steel manufacturers had argued that Chinese and other foreign steel companies were selling steel in the U.S. at below market prices, potentially trigger anti-dumping rules. Yet the WTO ruling will eliminate a key competitive advantage that U.S. Steel and its peers had in selling materials to the transportation and construction industries. Given the challenges U.S. Steel has had in dealing with sluggish levels of construction and infrastructure activity, the trade ruling is just another obstacle the company will have to overcome.

Harmonic fell 14%. The company makes technology helping media users develop better ways to deliver video to potential viewers, and it said that its video business had seen less demand than expected. As a result, it cut its revenue guidance for the quarter to a range of $108 million to $110 million, down between 5% and 10% from its previous sales range. Moreover, Harmonic expects just barely to break even for the quarter on an adjusted basis, well short of the profit most investors had expected to see. As media companies try to figure out what the future of video delivery will look like, Harmonic has high hopes that it will be able to weather the industry's changes and emerge stronger than ever.

Riverbed Technology dropped 9% after the network-equipment company warned that its revenue for the second quarter would fall short of its previous projections. Riverbed now believes that it will bring in around $265 million in sales, which is around 3% to 5% less than it had previously predicted and about 4% below what investors had wanted to see from the company. Riverbed cited delays in sales for the poor performance, with prospects for the maker of wide-area network optimization products seemingly still bright given the huge demand for enterprise cloud-computing capabilities and the need for infrastructure to support them. Yet with the company having been targeted by an activist hedge-fund investors, Riverbed can't afford to wait for long-term trends to prove its success to increasingly impatient shareholders.

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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Riverbed Technology, Inc. Stock Quote
Riverbed Technology, Inc.
RVBD.DL
United States Steel Corporation Stock Quote
United States Steel Corporation
X
$23.32 (1.48%) $0.34
Harmonic Inc. Stock Quote
Harmonic Inc.
HLIT
$11.34 (0.35%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.