Out Fox The $treet

Typical of the quarterly reports over the last couple of years,  Riverbed Technology  ( NASDAQ: RVBD     )   easily surpassed earnings estimates. The concerning part for investors are that the WAN optimization specialists failed to meet revenue numbers. On top of that, the primary Steelhead product had virtually flat growth from the prior year. The application performance company is still busy wrapping up the integration of the OPNET acquisition from the end of last year. So far the deal isn't generating the revenue synergies expected, but that could be due to a staggering slowdown in government spending. The company obtains a large portion of revenue especially during the third quarter of the year so a rebound in government spending could benefit Riverbed more than most. Read the full article here . Disclosure: Long RVBD. Please review the disclaimer page for more details. 

The market for network performance appliances has become so competitive that Riverbed Technology (NASDAQ: RVBD ) now trades at a below-market earnings multiple of 12. With the purchase of OPNET last year, the network performance company for globally connected enterprises is facing a weak market for network equipment while it still works to achieve the synergies promised as part of the merger. The network equipment sector is facing a couple of more » Disclosure: Long RVBD. Please review the disclaimer page for more details. 

Back at the end of October, in the midst of Hurricane Sandy, Riverbed Technology (NASDAQ: RVBD) made an accretive deal to purchase OPNET Technologies that caused the stock to plummet 18%. While investors clearly didn’t like the stock back then, the mood hasn’t improved significantly now with the stock trading between the original post announcement days range. The deal provided the leader in the WAN optimization market inroads more at Motley Fool » Disclosure: Long RVBD. Please review the disclaimer page for more details. 

The mantra continues to be that "cash is king." This mantra highlighted companies with cash on the balance sheet and generating strong cash flows, but it placed no emphasis on the use of that cash. Now after years of absurdly low interest rates, those companies hoarding cash might soon find out that using that cash for an accretive deal might rule the previous king. Prior to the market open on Monday that never happened due to Hurricane Sandy, Riverbed Technology, Inc. (RVBD) announced the deal to purchase OPNET Technologies, Inc. (OPNT) for cash and stock. The deal provides Riverbed with more access to the application performance management (APM) sector and ties in perfectly to extend the network performance management (NPM) of Riverbed's Cascade product. Read the full article at Seeking Alpha. Disclosure: Long RVBD. Please review the disclaimer page for more details. 

Riverbed Technology (RVBD) announced the doubling of the existing buyback program to $300M. This amounts to nearly 12% of the company. While our firm is a big fan of buybacks for large established firms, it isn't always the best use of capital for a company with a $2.5B market cap. Typically we'd rather see them spend the money or make an accretive deal. In the case of Riverbed though, it really is difficult to argue against at least the threat of a significant buyback. The stock has been absolutely crushed and if you believe management it is on the verge of a major new product explosion. The one fact that shorts or just sellers of the stock seem to miss is that Riverbed is a cash generation machine. The company has $600M in cash and will generate somewhere around $150M in positive cash flow this year. In essence, the doubling of the buyback will come directly from cash flow each and every day. The markets now see these great companies as just a piece of paper or more ...

Its always a bad situation to have a stock that plunges after hours. Do you panic and sell immediately? Do you hold and hope for a rebound? Or do you read the earnings report, listen to the conference call, and use your past research and knowledge on the stock to make an educated decision? Honestly, it really depends on what the company says compared to expectations. Knowing the company and the stock is the key. The stock reaction can have nothing to do with the company. It might be a buying opportunity. Or if the story has changed, investors have to be willing to cut and run. After the bell tonight, Riverbed Technology (RVBD) reported Q112 numbers that were essentially in-line. Unfortunately, the company guided to Q212 numbers that were a major disappointment to the market. The stock plunged nearly 18% in after hours. Was this move justified? Is the valuation so stretched that bad numbers suggest the stock should plunge? Riverbed is in the middle of a massive product refresh...

After the close on Thursday, networking equipment stocks Juniper Networks (JNPR) and Riverbed Technology (RVBD) reported earnings that sent both stocks lower on Friday. One company missed estimates and focused on issues with carrier spending and the European debt crisis. The other exceeded estimates and talked about a product transition in Q1 leading to a major new product cycle. So which stock was down 18% and which one was down 3% at the close on Friday? That might surprise most investors who read the earnings reports and listened to the conference calls. Read the full article at Seeking Alpha. Disclosure: Long RVBD. Please review the disclaimer page for more details. 

After the close Tuesday night, Riverbed Tech ( RVBD ) reported inline earnings and revenues that were slightly lower than estimates. The stock was crushed in after hours as traders overreacted to the revenue disappointment and ignored the record margins. The encouraging news was RVBD reporting record gross and operating margins. This means that RVBD wasn't cutting prices to just make the estimates. If anything, it backs up the claim that weakness in EMEA was as much about closing deals as competition. Other good news was that it used a part of its $611M cash hoard to invest in two new companies, Aptimize and Zeus Tech, that will be accretive in 2012. Also, US product sales grew by 50% and sales would've met the midpoint of analysts estimates if it had been able to ship the surge of orders in the last few days. Read the full article at SeekingAlpha.com.  Disclosure: Long RVBD in client and personal accounts. Please review the disclaimer page for more details. 

Great guidance from Riverbed Tech (RVBD) after the close today. The stock has been completely hammered the last couple of weeks with a whopping 6.5% drop today. Apparently this was enough to cause management to rush out the numbers for Q1. Not sure why the market continues to think that RVBD will miss estimates. This company provides a best of breed network optimization product that reduces network costs. Tomorrow should be a great day for the stock as they continue to produce record results though the stock was down 30% from recent highs. Tomorrow should be the start of a good run. RVBD will top street highs with that $.20 estimate. The 2012 top estimate is $1.44. Using that estimate that is completely achievable based on todays results, RVBD was only trading at 21.5x earnings. Note below that earnings just double for Q1 '11 and the PEG on RVBD is remarkably low. 5:40PM Riverbed Technology sees Q1 revs of $163-164 mln vs $160.1 mln Thomson Reuters consensus, sees Non-GAAP E...

After Wednesday's close, F5 Networks ( FFIV ) reported Q1 2011 numbers that easily beat their previous estimate of $0.81 by a large $0.07. The $0.88 number also surpassed the estimates of analyst who on average forecast $0.83. The revenue number wasn't as robust, barely making the top end of the range and missing analyst estimates. With the stock plunging after hours, investors appear to either be placing too much emphasis on the revenue numbers or focusing on the Q2 guidance. Below are the numbers reported for Q1 and the guidance for Q1 provided in the Q4 report.  See the full article at Seeking Alpha . 

Interesting comments from Barclays regarding Riverbed Tech (RVBD) back on the 22nd. Guess I missed their report due to the holidays. The numbers they've issued are interesting because it highlights the investing conundrum involving RVBD. Barclays upped 2011 estimates and issued 2012 numbers. On the face, RVBD trades at nearly 50x the street estimates for 2011 earnings of $.76. That PE ratio is extremely high and places RVBD on our list for pruning our holdings. Might be time to take our money and run. What makes the decision interesting is that as the calendar rolls into 2011, the market will begin looking towards 2012 numbers which Barclays estimate at $1.09 and possibly as high as $1.3. The best guess lowers the PE to a manageable 31 or roughly in line with the growth rate around 30%. Now if RVBD hits closer to the upper estimate the PE drops to 26 and a ratio much lower then the growth rate at that point. Hence, the dilemma of investing in high growth stocks. They only appea...

Wow! Wow! Wow! While expecting huge results from Riverbed Tech (RVBD), the actual numbers were beyond any expectations. RVBD reported Q3 earnings of $.34 versus $.27 estimates. Revenue increased 17% sequentially to $148M vs $135M estimates. Not often that a company reports a revenue beat of 10%. In fact both numbers easily exceed the Q4 estimates. Very impressive! These numbers had to be impressive to justify the 35x forward PE. Hence, Stone Fox unfortunately trimmed a third of our remaining shares in the Growth and Opportunistic Portfolios leaving roughly 50% of the original investment. Considering the stock was up over 100% in both portfolios it was just time to take more profits considering the wide swings in stock trading. Equinix (EQIX) dropped 30% after missing earnings and VMWare (VMW) dropped 7%. Guidance was for $155-158M with earnings of $.35. Appears they sandbagged on earnings especially considering the crushing numbers in Q3.Operating margins are expected to be flat, b...

Equinix (EQIX) is down over 30% today due to meager revenue shortfall of roughly 2%. Since EQIX is a competitor of Terremark Worldwide (TMRK) which is a prime holding of the Opportunistic and Growth portfolios it's worth checking out the potential collateral damage. TMRK is down around 5% today on back of this negative news from EQIX. Oddly though the news from EQIX isn't all that bearish considering they were able to boost EBITDA numbers and possibly half of the revenue issue comes from an acquisition that hasn't worked out as well as expected. Should TMRK be down on this news? Probably considering the run recently, but in no way should be news make an investor of TMRK throw in the towel. Higher EBITDA numbers are more important then revenue. Not to mention that TMRK isn't stuck with a bad merger deal. Nortia Research has a good article on the warning (as the market sees it though they also guided up) so I won't waste my time repeating the details on EQIX. Our...

Sold roughly 30-40% or Riverbed Technology (RVBD) in our portfolios after the stock has ramped from $30 to $45 in weeks. RVBD is now trading at over 30x 2011 earnings which is getting pricey. Not that other stocks like Open Table (OPEN) aren't more expensive, but its getting risky to hold onto such huge gains. Still keeping a good percentage of the shares so we're not negative on the stock just the short term valuation. RVBD had become the largest position by far in both the Growth and Opportunistic portfolios so pruning some shares became prudent for diversification purposes. 

Everybody claims it's not a stock picker market because all stocks are theoretically trading together due to ETFs. Not sure what explains why some stocks are hitting 52 week highs and others are lagging. Other then Riverbed Technology (RVBD) which has consistently hit new highs recently, Millicom Cellular (MICC) and ICICI Bank (IBN) are at or approaching 52 week highs under the radar. What do these 2 stocks have in common? Mainly a focus on business outside the US in fast growing markets. MICC is a leading cellular provider in Latin America, South America and Africa. They operate in 14 locations in these fast growing areas providing much more opportunity then any domestic operator. MICC has continued to slowly creep up even during a flat to down market the last 4 months. Almost a perfect chart. IBN is a leading bank in India. Having one of the largest banking networks in the fast growing country with the goal of growing beyond the borders of that country...

Even though this market is adverse to risk, money is still jumping into some of the high flying techs such as SalesForce.com (CRM) or Priceline.com (PCLN) Last night CRM reported a strong earnings report that beat estimates by some 7%, but the stock trades at over 70x next year estimates. Solid report, but does it really suggest the stock is worth buying? It doesn't to us, but that doesn't keep the stock from going up. CRM is a homerun from a corporate standpoint as they are taking over the online CRM market. Unfortunately everybody has caught onto this story and the stock has soared. As usual though the market tends to trade in a heard leading to a handful of stocks hitting absurd valuations. We'd rather see investments in say Riverbed Technology (RVBD) or Terremark Worldwide (TMRK). Both have similar growth patterns and will benefit from the new move to online CRM systems and cloud computing. In fact all 3 companies have growth rates for the next 5 years in the 20%+ r...

Demand in the technology sector continues to be questions. Everybody is so concerned that the cycle has peaked in the semi sector. Some of this is understandable after the Dot Com crash in 2000 and the Great Recession in 2008. Still demand seems to be building for new applications like mobile internet, 3D tv, and cloud computing. Several of the stocks in our portfolios like Teradyne (TER), TerreMark Worldwide (TMRK), and Riverbed Technology (RVBD) should just be soaring on the Insatiable Bandwidth demand from all these new products. Still only RVBD has broken out but that took explosive earnings. Interesting clip from the Xilinix (XLNX) CEO on Mad Money . He does a good job of pushing back on the cycle peak. We're just 1 year out of the Great Recession so it seems unthinkable that the tech sector has already peaked. Many a company like TER and XLNX have been posting numbers that match or equal the peaks of 2000, but their stocks lanquish. These could be big winners over the next 5 ...

Ok, maybe the Q2 earnings report and movement was surprising to others, but it was clear from the F5 Networks (FFIV) report and 13% surge on Thursday plus other reports from the likes of VMWare (VMW) that Riverbed Tech (RVBD) would likely report a blowout quarter. Whats really surprising is the lackluster jump on Thursday and the monster 14% move on Friday. After today, Riverbed Tech has become the largest position in both the Growth and Opportunistic Portfolios. Details on the earnings report from Reuters : * Q2 adj. EPS $0.25 vs est. $0.22 * Q2 rev $126.2 mln vs est. $119.4 mln * Sees Q3 EPS $0.27 vs est. $0.24 Product sales rose more than 40 percent, marking its fourth consecutive quarter of product revenue increase, the company said in a statement. After the results, S&P analyst Ari Bensinger upgraded the stock to "hold", saying that the networking equipment was experiencing a solid rebound in demand from the enterprise sector. "While we still see a lagging ...

In the middle of last week, technology stocks seemed about to become technically broken. A lot of the stocks we follow had broken major technical support and were in danger of serious damage. As of this afternoon, the following stocks we own in the Opportunistic and Growth Portfolios turned very bullish. Each one has now cleared the 20/50/200EMAs. Of course, it helps that the SP500 cleared the 200MA which is very bullish, but the tech sector seems ready to lead the market highers. These stocks have strong balance sheets and hence avoid any of the issues regarding debt concerns and funding. Instead they can focus on the strong growth in the developing economics and a rebound in the US. They all have some overhead resistance and still need to prove they can clear recent tops before the all clear is sounded. Riverbed Technology (RVBD) - strong WAN optimization company that got upgraded yesterday with a $32 target. Not a big jump from these levels but this company continues to preform at ...

Even the downgrade by Piper Jaffray couldn't keep the stock down today. Riverbed Tech (RVBD) looked like it would break below the 20ema at $27.44 but it was too strong to remain weak closing at $27.99. “We anticipate the company will continue to execute well, and upside to March quarter and 2010 estimates is highly likely, but we believe this is already priced into the stock,” he writes. “Given the upside scenario already priced into RVBD shares, we think it will be hard for the stock to outperform on a relative basis.” RVBD is the biggest holding at around 7% in our Growth Portfolio and one of the largest holdings in our Opportunistic (CV.IM) model. At this point, we're happy to hold a stock that can hold support especially on a downgrade.