Riverbed is off to a strong start for 2011 and the first quarter is shaping up to ahead of expectations as customers race to optimize their networks.
After market close Tuesday, Riverbed said that its first quarter results are stronger than expected. The company projected revenue of $163 million to $164 million for the first quarter with non-GAAP earnings of 19 cents a share to 20 cents a share. GAAP earnings will be 7 cents a share to 8 cents a share.Wall Street analysts were expecting earnings of 18 cents a share on revenue of $161.2 billion.
In a statement, Riverbed CEO Jerry Kennelly said sales increased across all geographies and "WAN optimization remains a priority."
With the preannounced earnings, Riverbed allayed a lot of building concerns. Analysts had worried that Riverbed would be hit by slower IT spending in Europe, Japan and the U.S. Federal government.
Oppenheimer analyst Ittai Kidron upgraded shares of Riverbed to "outperform" from "perform" and said the company has a strong product pipeline with its Cascade, Cloud Steelhead and Whitewater efforts. Kidron expects that Riverbed will also project a strong second quarter.
Other analysts were holding back on upgrades because a lot of Riverbed optimism is already accounted for in shares. "We continue to view Riverbed as a market share gainer in the rapidly growing WAN Optimization market and believe the company will continue to execute well," said Piper Jaffray analyst Troy Jensen.
In early trading, Wall Street was upbeat about Riverbed's prospects. Shares were up more than 14 percent.