Riverbed a Buy: Strong Products, Easy Compatibility

| About: Riverbed Technology, (RVBD)

I'm a big believer in Riverbed Technologies (NASDAQ:RVBD). It's one of those stocks to which you want to add to a current position, then it drops in a tech panic, but then Cramer mentions it and it's off to the races in the after hours.

Jim Cramer notes the promise of Riverbed in a post yesterday on RealMoney.com (sub req.), stating the likelihood of a rapid ramp in sales and earnings in the coming year.

Bottom line - the firm may not be the next Cisco (NASDAQ:CSCO), but it doesn't need to be in order to succeed. It develops Wide Area Network optimization hardware and software - known as "wide area data service solutions" that increase the speeds of internal corporate networks - and recently signed a large reseller deal with HP (NYSE:HPQ). 

It has several competitors, including Cisco, F5 (NASDAQ:FFIV) and Citrix (NASDAQ:CTXS), but RVBD has probably well over a year lead in technology and patent protection.   Several former Inktomi guys run it,  they're smart, and they sold little of their stock holdings in a recent secondary.

The market has been conservatively estimated at $20B, with over 1 million corporate locations requiring help with their internal data network. Once firms test RVBD products and determine their great utility, companies buy in bulk. One machine now, many in the future, thus creating an installed user base that may possess little need to switch firms.

Riverbed products also have easy compatibility with existing routing hardware from other suppliers. A laptop-based software product to be released later this year may create further separation from the pack. It will likely either continue to grow rapidly or become an acquisition target at much higher prices.

We have owned RVBD since its IPO in September of 2006, and new investors may find an opening in the sub-prime-related stock panic this month.

Position: Long RVBD

RVBD 6 month chart: