Cloud computing is still The Next Big Thing. How do I know? Customers can't stop buying Riverbed Technology's (Nasdaq: RVBD) deduplication appliances.

Not sure what deduplication means? Think of it as packing a suitcase with only the essentials. In a similar fashion, Riverbed's Steelhead products combine hardware and software that strip needless 1s and 0s from data packets as they travel over a network. Lighter data moves faster.

Customers still like that pitch. Product revenue ballooned 50% in the first quarter while total revenue soared 45%. Gross margin improved a percentage point year-over-year, to 76.2%, and returns on capital more than doubled over the same period.

Overall, Riverbed reported $163.6 million in Q1 revenue and $0.20 in per-share earnings. Both results beat expectations, which analysts revised last week to $0.19 per-share profit on $161.9 million in revenue.

You'd think that would be enough to lift the stock during today's bullish action. Not so. Shares of Riverbed are down more than 2% even as peers Cisco (Nasdaq: CSCO) and F5 Networks (Nasdaq: FFIV) rally.

Guidance may be the issue. In last night's conference call with analysts, Chief Financial Officer Randy Gottfried told investors to expect $171 million to $173 million in second quarter revenue and $0.21 in adjusted per share, about in line with what Wall Street was already expecting. Investors were apparently hoping for better. Dumb.

All signs point to Riverbed filling a massive need (i.e., faster data delivery over private and public networks) at a very attractive price point. In this sense, today's sellers are focusing on the trunks of the Redwoods in a Very Big Forest. Buy before they look up to see what they're missing.

Do you agree? Disagree? Tell us what you think about Riverbed's results, valuation, and competitive positioning using the comments box below. You can also rate Riverbed Technology in Motley Fool CAPS.

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