Riverbed faces a second-quarter revenue drop, and renewed pressure to find a buyer.

Dan O'Shea, Analyst, Heavyreading.com

July 14, 2014

2 Min Read
Riverbed Faces More Pressure to Sell

WAN optimization vendor Riverbed is facing a renewed pressure to sell after warning that second-quarter revenue came in lower than previous guidance. Activist investor Elliott Management, which tried to acquire Riverbed Technology Inc. (Nasdaq: RVBD) earlier this year with an offer for $19 per share, but was rebuffed, has reiterated its most recent offering of $21 per share. The hedge fund, which owns just less than 11% of Riverbed, is asking that the Riverbed board in any case retain an advisor to help it pursue a sale. (See Riverbed Spurns Takeover Offer.)

The renewed demand to sell came after Riverbed updated its second-quarter revenue numbers, saying that unexpectedly long sales cycles in North America will drop second-quarter revenue to $264 million to $265 million from the previously anticipated range of $274 million to $280 million. After the update, MKM Partners came out with a research note suggesting that the miss could prompt Riverbed to take the next step toward a sale. "We think the company missing its growth targets could potentially serve as a catalyst for management to begin a deeper engagement with interested buyers," wrote Michael Genovese, managing director at MKM Partners.

Since rejecting Elliott's earlier takeover bid, Riverbed has put out a couple of new product announcements, but also saw Juniper Networks Inc. (NYSE: JNPR) kill an application delivery controller product based on technology it licensed from Riverbed. Also, it has been facing intense competition from a crowded field of WAN optimization vendors, including upstart Aryaka , which has claimed it has been doing quite well at the expense of Riverbed and others. (See Aryaka Spikes Unpredictable Enterprise WAN Traffic), Riverbed Announces Networking Solution for Branch Offices, Riverbed Debuts Virtualized Monitoring Appliance, and Juniper Cuts Headcount by 6%, Axes ADC.)

— Dan O'Shea, Managing Editor, Light Reading

About the Author(s)

Dan O'Shea

Analyst, Heavyreading.com

You want Dans? We got 'em! This one, "Fancy" Dan O'Shea, has been covering the telecom industry for 20 years, writing about virtually every technology segment and winning several ASBPE awards in the process. He previously served as editor-in-chief of Telephony magazine, and was the founding editor of FierceTelecom. Grrrr! Most recently, this sleep-deprived father of two young children has been a Chicago-based freelance writer, and continues to pontificate on non-telecom topics such as fantasy sports, craft beer, baseball and other subjects that pay very little but go down well at parties. In his spare time he claims to be reading Ulysses (yeah, right), owns fantasy sports teams that almost never win, and indulges in some fieldwork with those craft beers. So basically, it's time to boost those bar budgets, folks!

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