Riverbed Technology Trims Q3 Outlook, Initiates Restructuring Plan

(RTTNews) - Network equipment maker Riverbed Technology, Inc (RVBD) on Thursday trimmed its earnings and revenue guidance for the third quarter due mainly to lower than expected growth in the WAN optimization and virtual ADC businesses.

The company also said it has initiated a restructuring plan in order to reduce costs as well as its board is undertaking a comprehensive review of strategic and financial alternatives to enhance shareholder value.

Following the news, Riverbed shares are currently trading higher by nearly four percent in early deals.

"In light of current business conditions, we are taking decisive steps to improve our cost structure in order to drive enhanced operating performance. We believe these actions enable us to deliver increased value to our shareholders while continuing to deliver the products and support expected by our customers," Chairman and CEO Jerry Kennelly said in a statement.

The San Francisco, California-based company trimmed adjusted earnings guidance for the third quarter to a range of $0.30 to $0.31 per share from the prior forecast range of $0.30 to $0.32 per share.

On average, 32 analysts polled by Thomson Reuters expected the company to report earnings of $0.31 per share for the quarter. Analysts' estimates typically exclude special items.

The company now projects adjusted revenues between $276 million and $277 million for the quarter, down from the previous outlook of between $285 million and $291 million, reflecting primarily lower than expected growth in the WAN optimization and virtual ADC businesses.

Thirty Wall Street analysts currently have a consensus revenue estimate of $286.75 million for the quarter.

The company also said it has initiated a restructuring plan to reduce annual costs by $20 million to $25 million and improve annual operating margins by 1 to 2 percent. The company expects these restructuring efforts to be substantially complete by the end of calendar 2014.

Riverbed added that its board of directors have decided to undertake a comprehensive review of strategic and financial alternatives to enhance shareholder value, with the assistance of its advisors. The company has not set a timetable for the review process.

RVBD closed Wednesday's regular trading session at $18.08, up $0.20 on a volume of 2.58 million shares.