Mazu might be a small acquisition, but it could play a big role in Riverbed's service provider ambitions

Craig Matsumoto, Editor-in-Chief, Light Reading

January 21, 2009

2 Min Read
Riverbed Sees Carrier Potential in Mazu

Riverbed Technology Inc. (Nasdaq: RVBD)'s first acquisition is a monitoring company -- not a thrill, on the surface, but it could help Riverbed continue its push into service provider territory.

The WAN acceleration company announced yesterday it would pay as much as $47 million cash for Mazu Networks -- $25 million up front and another $22 million if the startup delivers the goods. (See Riverbed to Buy Mazu.)

Cambridge, Mass.-based Mazu has been around for nine years; Pepsi and Bausch & Lomb are among its customers, Riverbed CEO Jerry M. Kennelly said on a call with analysts late yesterday.

Riverbed's stock was up $1.02 (11%) to $10.03 in early afternoon trading. It's not that Mazu is that exciting; Riverbed also announced yesterday that it expects fourth-quarter earnings to be 18 or 19 cents per share, compared with the 16 cents Wall Street was expecting. Riverbed will announce earnings on Feb. 3.

Mazu's Profiler product analyzes traffic patterns and application usage network-wide. The product consists of Mazu's software packaged into an off-the-shelf server.

Mazu has typically been associated with the security market, but a lot of its role in Riverbed will be to verify that the WAN acceleration technology is actually, you know, accelerating things. That's something large enterprises have been wanting -- and service providers, too, as Kennelly pointed out. At the same time, he tried to emphasize that lack of a Mazu hasn't been a handicap.

"This has not held us back from making progress in the service provider world. We just see the demands coming from service providers and this is an opportunity to possibly accelerate our progress there," he said.

Enterprises have been Riverbed's principal customers, but the company thinks its technology could also make a good managed service for telcos and other operators to offer.

Service provider business was about 1 or 2 percent of Riverbed's total in early 2007, estimates Randy Sherman, the vice president in charge of the company's service provider team. By late summer 2008, it was more like 13 or 14 percent, he says. Riverbed's managed to sign up BT Group plc (NYSE: BT; London: BTA) and NTT America Inc. as customers.

Riverbed expects to close the Mazu deal this quarter, with most of Mazu's 60 employees remaining back east. Mazu comes practically for free, to hear Kennelly tell it -- Mazu will add $12 million to $15 million in revenues in 2009 and will have a neutral effect on profitability this year. Mazu should add to profits in 2010, according to Riverbed executives.

— Craig Mazu-moto, West Coast Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like