So far, our technology names have really done well in terms of earning report reactions. You never know how the casino will take the figures and, considering many earnings reports have been sold this week, unless they were huge beats it's been a minefield. Eventually we will step on a mine - it's just part of the game - but for now we seem to be weaving through nicely.
Riverbed Technology (RVBD) was the latest to report last night and is up a solid 11% today. (full report here) Much like F5 Networks (FFIV), I thought it was a good report though not stupendous (beat by 2 pennies) and there was a slight uptick in guidance (1 to 2 pennies), but in this "1999 redux" market it is not taking much to make investors giddy. A strange week; we've had 4 stocks with huge surges ...
In terms of valuation, analysts are in for the year at .86... more likely RVBD will hit .90ish. With the stock over $32, this is over a 35 forward PE ratio. I find that rich myself, but since this is 1999 valuation doesn't matter anymore. Until it's March 2000 redux, and it does matter. With the Bernanke Forcefield on full blast... we just continue to dance and hope that when valuation matters again we are ready to sell and lock in profits. (Click to enlarge)
Via Reuters: (My comments in parenthesis)
- Riverbed Technology Inc forecast second-quarter results above Wall Street expectations as IT spending improved. The company projected second-quarter adjusted earnings of 21 cents to 22 cents a share, excluding items, on revenue of $117 million to $120 million. Analysts polled by Thomson Reuters I/B/E/S projected earnings of 20 cents per share, on revenue of $114.3 million. (I don't consider that much of a guide up, but as I said above, this market is in a state of frenzy so I'm just going along for the ride.)
- "There's an upgrade cycle happening in the enterprise space," Piper Jaffray analyst Troy Jensen said. "Where you're seeing the bulk of the IT spending is in larger enterprises and they are looking to optimize their infrastructure, reduce the amount of superflous equipment in office," Canaccord Adams analyst Paul Mansky said. Some of the true catalysts behind WAN optimization at the onset is coming back into focus, he added."
- For the first quarter, Riverbed reported net income of $1.1 million, or 1 cent a share, compared with $1 million, or 1 cent a share a year earlier. Excluding items, it earned 20 cents a share. Revenue for the company rose 27% to $112.4 million in the first quarter. Product sales increased 24% over the prior year led by solid growth in enterprise sales.
- Analysts polled by Thomson Reuters I/B/E/S expected earnings of 18 cents a share, excluding exceptional items, on revenue of $109.16 million.
[Mar 12, 2010: Bookkeeping - Restarting Riverbed Technology]
[Feb 11, 2010: IBD - Riverbed Technology: Making the Network Faster Pays Off]
[Jun 29, 2009: Even Handed Story on Riverbed Technology on CBSMarketwatch]
[Apr 8, 2009: Stimulus Fire Hydrant (Worldwide) Should Benefit Networking Companies / Broadband]
[Nov 27, 2007: Riverbed Technology - Fortune Article]
Disclosure: Long Riverbed Technology in fund; no personal position