Riverbed cuts sales outlook, restructures, eyes strategic alternatives

The company said its third quarter sales will fall short of estimates. The company plans to restructure and pursue strategic alternatives.

Riverbed Technology, which makes application performance hardware and software, cut its outlook for the fiscal third quarter, said it will restructure and pursue strategic alternatives.

The company projected third quarter sales of $276 million to $277 million, but had projected revenue of $285 million to $291 million. Riverbed said its Wide Area Networking (WAN) optimization and virtual ADC units were weaker than expected.

Riverbed also said it would report non-GAAP earnings of 30 cents a share to 31 cents a share. The company had projected sales of 30 to 32 cents a share. Wall Street was expecting earnings of 31 cents a share on revenue of $286 million for the third quarter. 

While Riverbed CEO Jerry Kennelly cited "current business conditions" for the sales warning, the company revenue growth has stalled in 2014. In addition, Riverbed's sales have disappointed Wall Street four out of the last six quarters and earnings have been hit or miss relative to estimates.

Riverbed said it would restructure to cut annual costs by $20 million to $25 million. The move would boost annual operating margins by 1 percent to 2 percent. The undisclosed number of layoffs would be complete by the end of 2014.

Given those moving parts, Riverbed's board is looking into "strategic and financial alternatives." There is no timetable for the review, but Riverbed will be at least entertaining acquisition offers. Riverbed could be a acquisition option for Cisco, Citrix or privately held Blue Coat Systems. 

Riverbed will report earnings Oct. 23.