Riverbed Leaves Others in its Wake for Gartner Magic Quadrant for WAN Optimization Controllers

Gartner has released  their Magic Quadrant for Wan Optimization Controllers ID:G00219270.  Only three companies made it into the Leaders portion of the magic quadrant, Riverbed, Blue Coat Systems, and Silver Peak.  Gartner.  Riverbed led the other two companies by a great deal from the perspective of Completeness of Visionand Ability to Execute.  Silver Peak and Blue Coat were practically on top of one another with Citrix close by in the Visionary area of the Magic Quadrant.  and Ability To Execute.

Cautions for Blue Coat included stagnant revenue, being late with features, and management churn.  This makes it sounds as if their acquisition by Thoma Bravo for $1.3 billion in mid February 2012 has yet to payoff.  Cautions for Silver Peak Systems included lacking application specific optimization and lacking in some capabilities for mobile and home office workers.

Gartner praised riverbed for having the “broadest set of capabilities in the industry” and being one of the most innovative companies in the market.

Riverbed is currently trading at around $16.  Far off its high of around $30 in March 2012.  It bottomed out around $13.30 in July. Riverbed's financial report published in early February was mixed.  Total GAAP revenue for Q4’12 was $237 million, up 9% compared to the third quarter of fiscal year 2012 (Q3’12)   for the full year 2012, GAAP revenue was $837 million, up 15% compared to 2011 GAAP net income for Q4’12 was $5 million.  This compares with $20 million, in Q4, 2011.   

However, Riverbed  captured more than 52% share of the worldwide Advanced Platform WAN optimization market share based on vendor revenue for the third quarter of 2012 per Gartner’s according to Gartner’s  report titled “Market Share: Application Acceleration Equipment, Worldwide 3Q12” December 2012.

 http://www.riverbed.com/us/company/news/press_releases/2013/press_020713  

So the revenue trends are in the right direction.  Now about that reduction in net income?

Overall, with respect to their main competitors in the Magic Quadrant.  Their position is golden compared to Silver Peak.  Their growth in 2012 probably has Blue Coat singing the blues.  Riverbed is well positioned for 2013. 

How Do You Use A Gartner Magic Quadrant?

The below is from a Research Methodologies piece on utilizing Magic Quadrants.  Too often, a pic of the quadrant will make its way onto a slide deck with no explanation.

Clients use Magic Quadrants as a first step to understanding the technology providers they might consider for a specific investment opportunity.  Keep in mind that focusing on the leaders' quadrant isn't always the best course of action.  There are good reasons to consider market challengers.  And a niche player may support your needs better than a market leader.  It all depends on how the provider aligns with your business goals.

 The five other companies in the WAN Optimization Controllers Magic Quadrant are probably pleased about the above.

http://www.gartner.com/technology/research/methodologies/research_mq.jsp

Secureworld expo 2012, Decrypting the Mayan Code - Santa Clara Day 1 Musings

Day 1 of secureworld expo 2012, Decrypting the Mayan Code, in Santa Clara (Bay Area) was a lightly attended event.  None of the smaller sessions I    attended on Day 1 were more than half-full.  The afternoon panel discussion was full, however.  There were more than sixteen sessions on Day 1, a combination of open sessions, 2-Day   conference attendees’ sessions, and invitation only session.  A sense of déjà vu over a past RSA San Francisco event.  The theme of the conference,   “Decrypting the Mayan Code” 

Some Observations

• Opening   Keynote – PCI in 2012 and Beyond.  More of the presentation was spent on promoting the organization than where PCI was heading.  I learned that the speaker has a hearing-impaired dog.

• Check Point Software - Security Blueprint talk -   Good talk about Check Point’s security map without doing a technology deep dive.  Check Point delivers their technology “your way”, depending on whether you want an appliance,   VMware, or you have fully imbibed the private or public cloud kool aid.  They stated that their solutions provide comparable features, functions, performance, regardless of the form factor you purchase or license their technology.

• RSA - Authentication, Addressing a Changing IT Environment talk -   Quick overview of some authentication alternatives.  Brief mention of “issues” RSA had in the past year with theft.  Other companies involved with authentication were in the audience (and identified themselves).

• Panel discussion – BYOD; Laptops, Smartphones, Tablets, Oh My!  (Absolute, Air-Watch, Appsense, Good Technology, RSA ) – A good discussion.  Well attended.  The consensus was that BYOD has taken off and there is no going back.  Now, it is a matter of protecting the data.  Members of the panel felt that  t there is an obvious positive ROI to implementing BYOD within the company.  Disagreement as to whether the growth has come from the masses demanding (or just doing) this, or from the executive offices demanding it.  One company more or less recommended the 80/20 suggestion for implementation.  Namely, that you could get 80% of what your company needs with 20% of the effort.  Much of the discussion used the briefcase motif.  If the employee owns the briefcase, how can  you justify the company owning the lock if there is  personal information in the briefcase?  The suggestion; consider the company having a smaller briefcase within the personal briefcase.  The company then would own  that briefcase, the lock, the data, and the right to wipe/empty that briefcase of any information.

• Little success in getting competitors to dis one another in the exhibitor area despite my gentle lobbing of hanging curves.  Fortinet stated that they had next generation firewalls, (NGFWs);  before Palo Alto Networks and that Palo Alto Networks took over the phrase, (most people consider them the originator of the term).  Palo Alto Networks recognizes Websense not at the event) as a competitor, but feels that their technology still provides a better solution (it also sounds as Palo Alto Networks   had a nice internal celebration when they had their IPO.  Riverbed; no discussion of interest.  Blue Coat; a tad sensitive.  Their response when I asked what technology was under the hood of their DLP appliance (it appears not be a DLP/Malware appliance as in the previous version); their initial response was a non-confrontational, “why are you asking that?”  They then mentioned that it was from Code Green.

For those who are interested – Tchotchkes!

In addition to the usual data sheets;  tee shirt (leftover  from Black Hat), commuter mugs, BPA free water bottles, mugs with handles pens, pens, pens, transformer like pen!, mobile phone holder, a  ring style Frisbee flying saucer clone, candy, and a sumo wrestler stress toy (very cool).  

 

Casino break! 

Interesting listening to non-professionals explain the game and rules to those who had little experience with the games.

 An advanced screen of the movie “code 2600” is scheduled for day two of the conference. 

About secureworld expo 2012 – Decrypting the Mayan Code

 This is a multi city event.  Events are scheduled for Detroit, Dallas, and Seattle.

 http://www.secureworldpost.secureworldexpo.com/  

Riverbed Technology Stock Rolling Down the River

Riverbed Technology (RVBD) stock took a major hit on Friday, dropping 29%  to $19.85 following their earnings announcement on Thursday.      This was close to their  52-week low of $19.48 in October.  Riverbed Technology’s 52-week peak was   around $41 in July 2011. 

This tumble was the most for Riverbed most since its market debut five years ago. As part of the earnings announcement, Riverbed   lowered their forecast for 2012 sales growth, citing the effect of new product introductions.

“The combination of our product transition and a seasonally weaker quarter was challenging,” President and CEO Jerry Kennelly, said on a conference call.   “We continue to feel the unavoidable growing pains associated with becoming a multiproduct company.”

Riverbed announced their Q1 results on Thursday.  “In a seasonally difficult quarter, we completed a major product cycle and achieved results within our guidance range,” stated Kennelly.  Their Q1 revenue of $182 million was 12% greater year over year.  Their net income dropped from $13 million to $7 million, not an auspicious way to start the fiscal year. 

Riverbed is in the Leaders section of  the January 2011  Gartner Magic Quadrant for WAN Optimization Controllers. They rank  higher that the other two companies in the Leaders section, for both Ability to Execute and Completeness of Vision.   Blue Coat Systems and Silver Peak Systems are the other two companies in this portion of the quadrant.

Nonetheless, analysts were not kind to Riverbed on Friday following the earnings announcement.  The stock received seven downgrades,  from Mizuho, JP Morgan, Wedbush Securities, Capstone, Cantor, Oppenheimer, and RBC Capital.

Riverbed may be dealing with some further  financial rapids in Q2. 

http://www.bloomberg.com/news/2012-04-20/riverbed-technology-tumbles-as-sales-trail-estimates.html

 

http://ir.riverbed.com/phoenix.zhtml?c=198235&p=irol-newsArticle&ID=1685213&highlight