Did Riverbed just put a big move on Cisco with release of 6.0?

RBC Capital Markets Managing Director - Mark Sue gives his take on the future prospects of Riverbed, "On a risk/reward basis, we're maintaining our neutral stance on Riverbed's shares, which are trading at 31x the Street's CY10E EPS of $0.77 (vs. our$0.85). Riverbed's stock has rebounded after last quarter's miss and much of the stock's recent movement may be related to the potential of a takeout. Our view is that the market for WAN optimization is growing again after last quarter's lull and Riverbed is at a minimum maintaining its market share. However, growth will likely be lumpy so we would rather be valuation disciplined.

"Riverbed had a decent pipeline going into the quarter, and with incremental improvements in closure rates, we estimate a modest beat to the high end of the guidance range of $97M to $99M and non GAAP EPS of $0.16. For the upcoming quarter, aided by some increase in deal sizes, broad improvements in education, healthcare and financial verticals, Riverbed may endorse revenues in a range of $105M to $107M vs. the current consensus of $104M."

Sue continued, "Regionally, it's still about North America with some improvements noted for Riverbed in Asia (China and Australia). Some weakness in Europe (mostly the UK) was noted, yet there was no major deterioration. No out of the ordinary pricing tactics were noted from competitor Cisco during the quarter, and thus we're expecting little change to gross margins of 76.1%."

Sue added, "Balance sheet remains healthy with cash balance of $269 million or $3.70 per share and no debt. We expect Riverbed to continue its trend of growing deferred revenues sequentially. Riverbed, similar to most tech companies, has started to hire again."

Sue concluded, "Over the past year, Riverbed has traded in an EV/sales range of 0.9x to 4.3x with an average multiple of 2.4x. Riverbed is currently trading at approximately 3.2x CY2010E EV/sales, using our CY2010 revenue estimate of $456M. We apply a 3.8x EV/sales target multiple, above its historical average to reflect Riverbed's dominant position in the WAN optimization market, to our CY10 estimates to derive our price target of $28. On a P/E basis, Riverbed has traded in a P/E range of 11x to 35x with an average of 23x over the past year."

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Sincerely,

Brad Reese on Cisco
Network World Cisco Subnet
BradReese.Com Cisco Refurbished

Silver Peak has supported MAC clients since inception. Here are some examples:
http://www.silver-peak.com/News/07152009_Continuum.htm
http://www.silver-peak.com/News/09182006_ivey.htm

Silver Peak has optimized Citrix and other VDI apps since inception. Here are some examples:
http://www.silver-peak.com/News/04232008_linklaters.htm
http://www.silver-peak.com/news/05042009_TheDoctors.htm

Silver Peak has been able to optimize DR in its standard family of appliances since inception. Here are some examples:
http://www.silver-peak.com/News/022309_Global_Ethanol.htm
http://www.silver-peak.com/News/012609_Dayton_Superior.htm

WANop vendors that rely on application-specific enhancements, like Riverbed, will ALWAYS be playing catchup to vendors like Silver Peak, which focus on fixing the WAN in support of all IP applications.....

Riverbed playing catch up to Silver Peak? More like Silver Peak playing catch up to Juniper who is playing catch up to Cisco who is playing catch up to Blue Coat who is behind Riverbed.

Nice post though as I have not heard Silver Peaks name in about a year or so.

Look again:

ftp://ftp.silverpeaksystems.com/releases/NX_Release_Notes_Version_2.0.9.0.pdf

Specifically, page 13 of the Silver Peak's 2.0.9 release notes states the following:

Directory browsing optimization is not
effective with Apple Macintosh clients
and servers.
CIFS directory browsing optimization is not effective with Apple
Macintosh clients and servers.

CIFS acceleration is not compatible with
Apple Macintosh clients and shared
Excel workbooks
Disable CIFS acceleration to Apple Macintosh clients if shared Excel
workbooks are in use.

More likely, Silver Peak's press releases are carefully-worded to give the impression that they accelerate MAC, when in reality they can only do generic TCP compression. Of course, Riverbed's original Steelhead 1.0 released in 2004 could do that too.

Before Silver Peak works on Macintosh, I would recommend that they first work on Exchange 2003/2007 (as with MAC, they only support generic TCP compression, and no layer 7 optimization for Exchange 2003/2007), NFS, HTTP, SSL, Lotus Notes, and other protocols that Riverbed has already introduced. They might also want to work on supporting Netapp filers and Samba servers, since there are quite a few of those around too.

Josh Tseng
Riverbed Technology

from the example above on the Mac user, it sounds like rieverbed did no CIFS acceleration for Mac at all. A 6MB file in more than 3 minutes sound like a non optimized CIFS session. So what this release is saying is that you just added some CIFS support to cover MAC. Thats how I understood it.

There is nothing new in this press release. I'm not sure what you mean with the title of this post but this release sounds like most of their other releases.

My microwave oven has netflow & SNMP. So what? The implementation of CIFS on MAC is no big deal either - its still CIFS. Where exactly is the innovation and this 'big move' you're talking about? Maybe we can understand if you decipher this press release.

For anyone who would like to understand the significance and importance of Riverbed's optimization of Mac clients, please see my blog posted here:

http://blog.riverbed.com/2009/10/macintosh-support-in-rios-60.html

Josh Tseng
Riverbed Technology