Weak sales, forecast slam Riverbed’s shares

SAN FRANCISCO (MarketWatch) � Riverbed Technology Inc. shares plunged as much as 27% Friday as at least eight analysts cut ratings on the networking-technology company following lackluster first-quarter sales and a disappointing outlook.

Riverbed RVBD �gave up $8.01 a share, or almost 29%, to close Friday at $19.85.

Late Thursday, Riverbed RVBD �said it earned $7 million, or 4 cents a share, on revenue of $182 million for the first quarter. Excluding one-time items, Riverbed would have earned $33 million, or 20 cents a share, on revenue of $183 million.

However, analysts� average forecast had Riverbed�s revenue coming in at $186.1 million.

The company also said that for the second quarter, it expects to earn 21 to 22 cents a share on revenue in a range of $193 million to $197 million, while analysts had forecast 24 cents a share on $201.9 million, on average.

/quotes/zigman/100646/quotes/nls/rvbd RVBD 14.20, +0.34, +2.45%

Riverbed executives blamed the weak revenue and outlook on changes in products and sales efforts during the March quarter, while several analysts expressed concern about Riverbed�s ability to execute over the near term.

�We think there remains significant risk to [Riverbed�s] 2012 guidance,� said Wedbush Securities analyst Rohit Chopra, in a research note. Chopra cut his rating on Riverbed to neutral from outperform and lowered his price target to on the company�s shares to $23 from $28 previously.

Mark Sue, of RBC Capital Markets, took down his view on Riverbed to underperform, or sell, from outperform. The analyst said that after a period of fast growth and share gains, there are signs that the market for some of Riverbed�s product offerings may be maturing faster than the company had anticipated.

Riverbed�s struggling with attempting to transform its sales force from selling point products to solutions, Sue said. While this may pay dividends in the long term, it may not be possible to execute without disruptions in the short term, he added

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While Chopra and Sue seemed to tout the day�s popular opinion about Riverbed, not all analysts were quick to abandon the networking-equipment maker.

JMP Securities� Erik Suppiger, for one, maintained an outperform rating with a price target of $30. In a note, Suppiger said he expects the company to get back on track after its sales staff and product-channel partners overcome an initial learning curve that goes with upgrades made in several of Riverbed�s flagship products and new devices.

�We believe Riverbed is in a product transition and growth will reaccelerate once the company refines its sales strategy,� Suppiger wrote.