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

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

Riverbed Technology Leader in 2012 Gartner Magic Quadrant for WAN Optimization Controllers

In the thought and technology leadership battle for supremacy in the WAN Optimization Controller market, Riverbed Technology is the clear leader among those in the 2012 Gartner Magic Quadrant for WAN Optimization Controllers (WOC). (January 2012 ID:G00219270)

Only three companies are in the Leaders portion of the magic quadrant- Riverbed Technology, Blue Coat Systems, and Silver Peak Systems. Riverbed Technology was rated both the highest in Ability to Execute, and Completeness of Vision. Silver Peak Systems and Blue Coat Systems are adjacent to each other and (noticeably) further down in the leaders quadrant. Kudos for being in the leaders section for all three! Eight products total are in the quadrant.

Cautions that may have cost Blue Coat Systems according to Gartner include – late features, management turnover, declining market share, weak softWOC.

Note - Private equity firm Thoma Bravo is acquiring Blue Coat Systems for $1.3 billion. This deal was announced in December. Thoma Bravo also owns SonicWall. http://dealbook.nytimes.com/2011/12/09/thoma-bravo-acquires-blue-coat-systems-for-1-3-billion/

Cautions that may have cost Silver Peak Systems include - No softWOC, lacks some application-specific optimization, some video on demand limitations for remote-office caching streaming.

Strengths for Riverbed Technology mentioned by Gartner – Broadest set of capabilities in the industry, overall innovations, broad solution for dynamic browser-based applications like SharePoint.

How Do You Use Gartner Magic Quadrants?

The below is from a great Gartner piece in utilizing their Magic Quadrant.

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

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