Missed Opportunity in Riverbed Technology (RVBD); Ok Results from Juniper Networks (JNPR)

Riverbed Technology (RVDB) has been the name I've been looking to add to give some technology exposure since I think its product would be least affected by the recession, but I wanted to wait for earnings to see how the market would treat it - the answer is "very well". The stock is up nearly 20% in early trading. Gross margin not only holding steady but up from 72.6% a year ago to 74.0% this quarter. Unlike many technology companies who are shrinking and making numbers by chopping people left and right, there is still some solid growth in Riverbed.

• Riverbed Technology Inc. said its first-quarter profit rose 53 percent, as sales climbed. Excluding one-time items, the company earned 9.2 million, or 13 cents per share. That compares to an adjusted profit of $7.9 million, or 11 cents per share last year. Analysts, who typically exclude one-time items, surveyed by Thomson Reuters expected the company to earn 10 cents per share on revenue of $85.1 million.

• Total revenue was $88.2 million, up 21 percent from $73 million the previous year.

• Cash, cash equivalents, and marketable securities of $258.2 million and no debt

Via AP

• Riverbed Technology Inc. shares jumped in Friday premarket trading as analysts hiked their earnings estimates on the data services provider after it turned in a 53 percent jump in profit in the first quarter.

• Riverbed's quarter was "remarkably normal" given the recession, said Jefferies & Co. analyst William Choi in a note to clients. He boosted his earnings-per-share and sales estimates for 2009 and 2010. "Customers' relentless focus on cost benefits Riverbed, and we anticipate steady growth to continue," Choi said. He boosted his target price on the stock by $3 to $15.

• Stifel Nicolaus analyst Sanjiv Wadhwani also increased his earnings estimates, commending the company for its pipeline of projects, which was bigger at the end of March than it was at the end of December. Riverbed's guidance for the second quarter of 14 cents per share of profit is above Wall Street estimates by 2 cents, according to Thomson.

• The company's optimization technology products help customers save on pricey network equipment and bandwidth upgrades, Choi said.

Full report here

Juniper Networks (JNPR) also reported and while I am not so bullish on the fundamentals (very reliant on a few of the telecom companies to spend), I could see this one being touted as a "stimulus" play. [Apr 8, 2009: Stimulus Fire Hydrant (Worldwide) Should Benefit Networking Companies/Broadband] It is likewise up 15% this AM on "stability" - I am surprised there is such action in the name considering they gave the market a hint of what was to come within the past few weeks[Apr 9, 2009: Juniper Networks and F5 Networks Benefit from Low Expectations], but right now in this market all news is good news. The bar is so very low that anyone saying things are more stable than the free fall of Q4 08 and Q1 09 is being rewarded mightily. These views are setting us up for some disappointment later in the year once people expect more than "stability" but that's a problem for another quarter. Juniper did not provide guidance, and said visibility is impossible - but this market doesn't care.

• Network equipment maker Juniper Networks Inc (JNPR) said business was stabilizing and gave second-quarter forecasts that met Wall Street expectations. "The environment seems to be more stable than it was in early Q1," Chief Executive Kevin Johnson said on a conference call

• Analysts said the remarks suggested that although Juniper's customers --mainly phone companies like AT&T Inc (T) and large businesses with complex data networks-- were still cutting back on technology spending, recovery may be near. "Stability shows you the rate of cuts are beginning to slow and there's a return to normalcy," said RBC Capital Markets analyst Mark Sue. "The view, taken together with the guidance, shows that the worst might be over."

• And while Juniper's first-quarter results were mostly at the higher end of its most recent outlook, analysts pointed out that revenue was much lower than its initial forecast of 3 months ago. Juniper's first-quarter revenue fell 7 percent to $764.2 million, near the high end of its latest forecast of $760 million to $765 million but well below its initial target of $800 million to $830 million set last quarter.

• It reported a net loss of $4.5 million, or 1 cent a share, compared with a profit of $110.4 million, or 20 cents a share, in the same quarter a year earlier. Excluding items such as stock-based compensation expense and restructuring charges, profit was 17 cents. That compared to its recent forecast of 16 cents to 17 cents, and the company said cost cuts helped it meet that forecast.

• Juniper, which competes with bigger rival Cisco Systems (CSCO) in making routing and switching products, forecast earnings per share, excluding special items, to be between 16 cents and 18 cents in the second quarter, on revenue of $740 million to $780 million. Wall Street analysts had forecast second-quarter earnings at 17 cents per share on revenue of $770 million, according to Reuters Estimates.

• The company, however, did not give an outlook for the full year, and Johnson said communications service providers still appeared to be assessing their needs on a weekly, rather than quarterly basis, making it hard to forecast Juniper's own sales outlook. "Even with that improvement in stability, visibility on revenue streams remains low," the CEO said.

• Top U.S. phone companies AT&T (T) and Verizon Communications Inc (VZ), both Juniper clients, have said they would be trimming capital spending in 2009.

• RBC's Sue said he had an "overweight" recommendation on Juniper's shares, but warned that it may not be too wise to see the company's latest announcement as a turning point for the overall industry. "Remember the company missed its target for the March quarter. They were trying to do around $820 million in revenue," he said, referring to the first-quarter revenue.

This looks like a market to me now reaching for any shred of good news; companies are beating very low bars and even without any visibility in the future are stating that the free fall (which could not continue or else the world economy would be over by 2010 at the pace it was going) has stopped - and being rewarded. But for now it's sentiment and giddy reigns as the emotion of the day.

[Feb 5, 2008: Riverbed Technology Continues to Execute and the Stock Continues to Fall]

[Nov 27, 2007: Riverbed Technology - Fortune Article]

No positions