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Michael Horsch Fizz

RVBD AT A GLANCE

P/E ► 141 VERY HIGH EV/EBITDA ► 141 VERY HIGH ROA ► 2.8% AVG ROE ► 3.8% AVG Debt to Equity ► 0.417 AVG Current Ratio ► 3.33 AVG

 

 

 

 

 

 

Revenue, Net Income, and Net MarginRevenue, Gross Profit, and Gross MarginOperating IncomeEbitIncome Before TaxesNet Income from Continuing OpsInterest vs Continuing IncomeInterest CoverageOperating Expenses Research & DevelopmentSG&AAmortization & Depreciation

Riverbed, a leader in the WAFS (Wide Area File Services) arena with their Steelhead product, can execute on new market opportunities but not without facing and overcoming significant challenges. In the broader technology sector of Application Acceleration the competition has become fierce in the last eight quarters. The competition includes but is not limited to:

• Blue Coat Systems (BCSI)
• Brocade Communications Systems (BRCD)
• Cisco Systems (CSCO)
• Citrix Systems (CTXS)
• F5 Networks (FFIV)
• Juniper Networks (JNPR)
• Packeteer (PKTR)

Until recently, Riverbed has beaten the competition in performance and price. The two variables we are keeping an eye on are:

1. Recent advancements in competitor product performance. Cisco WAAS, F5 Wanjet and others have made significant advancements. They are established vendors with impressive representation in the market via their direct sales efforts, VAR's and SI's
2. Riverbed's partnership with Radware (RDWR). This relationship is timely. When considering the swath of technologies required to represent application acceleration solutions, Radware has the products Riverbed lacks. Radware has WOC (WAN Optimization Controllers)Functionality and AFE (Application Front End) Functionality. Radware is an Israeli based company who at one time was the only contender up against F5 technologically. F5 over the years has outmarketed and outsold Radware. With Riverbeds sales momentum, Radware may be able to put themselves back into the North American market.

Riverbed does face greater challenges for the remainder of 2007 and well into 2008. Client demand in the enterprise space has been very strong. Giants like Cisco recognized four years ago Network Application Acceleration would be a key technology empowering them to have greater account control. This has not escaped other large vendors such as Juniper and Citrix. For investors the challenge will be to:

1. figure out how fast the pie itself is growing coupled with
2. the ability to read through vendor hype and predict who is gaining market share
3. Keep up with the complexity of this technology.

[edit] Company Overview

Riverbed Technology, Inc. (Riverbed) has developed a solution to the fundamental problems of wide-area distributed computing. The Company’s Steelhead appliances enable its customers to improve the performance of their applications and access to their data across wide area networks (WANs), increasing transmission speeds by 5 to 50 times and in some cases by up to 100 times. Riverbed’s products also offer the ability to simplify information technology (IT) infrastructure. Riverbed sells its products and support directly through its sales force and indirectly through distribution partners, including value-added resellers (VARs). Riverbed's wide-area data services (WDS) solution consists of the Riverbed Optimization System (RiOS), the Company's software that is embedded on a general-purpose, hardware-computing platform to form its Steelhead appliances. RiOS integrates four sets of technologies: Data Streamlining, Transport Streamlining, Application Streamlining and Management Streamlining.
199 Fremont Street San Francisco, CA 94105 USA |415-247-8800 http://www.riverbed.com

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