Riverbed's Warning - Bad News For Networking Equipment Sector

Cowen & Co notes that last night Riverbed Technology (NASDAQ:RVBD), a leading provider of WAN optimization solutions, pre-announced that its Q1 revenue would be roughly $72.0-$73.0mm, well below its original guidance range of $79.0-$82.0mm. Riverbed's main competitors include both Cisco (CSCO) and Juniper (JNPR).

On the call, management noted that the shortfall was mainly the result of delayed purchases with respect to its larger deals. Furthermore, it noted that while some larger deals got pushed others were downsized.

Given Riverbed's weaker then expected results and given that it participates in one of the fastest growing market segments within enterprise networking, they believe that this increases the risk associated with all enterprise facing vendors operating results including Cisco, Foundry, Juniper, NETGEAR, and Polycom.

Notablecalls: RVBD represents the sexiest part of networking. With these guys failing to come at least in-line with guidance, people should be worried about the current state of business at CSCO & JNPR.

Comments

[WAN Guy:]

How about the fact that Riverbed products cannot scale to the large enterprise? We had to pull the gear out and replace it someone else because it didn’t work. Don't be surprised if you see Riverbed continue to overpromise and under deliver.

2008 Apr 04 09:56 AM

[optic:]

To use riverbed as an indicator of the state of the tech sector is irresponsible.

2008 Apr 04 12:02 PM

[Router Jockey:]

Riverbed sales reps typically dont 'deal' or discount with their customers like a Cisco or Juniper rep will. Maybe a corp directive or attitude but they will not drop prices to move equipment, maybe that will change going forward. The products are the class of the field, Cisco is good too, but Juniper is a distant follower in the WAN accelleration biz...

2008 Apr 05 08:14 PM

[bradkc777:]

The market for WAN-acceleration gear might be cooling as a result of macroeconomic conditions, but Cisco is not faring as as badly as Riverbed, which has begun losing share to its bigger rival.

2008 Apr 07 11:20 AM