Riverbed Technology shares drop more than 25%

BenjaminPimentel

SAN FRANCISCO (MarketWatch) -- Riverbed Technology Inc. took one of the biggest hits in Wednesday's tech sell-off as the software company saw its shares plunge more than 25%.

Riverbed
RVBD
reported third-quarter income of $2.77 million on Tuesday on revenue of $63.3 million.

The company, which makes software that enables corporate data centers to run faster, became more attractive to investors after the successful initial public offering of VMware Inc.
VMW, -1.06%
another software company focused on corporate networks.

VMware is a leading player in the area of virtualization and makes software that allows different operating systems to run on a single computer. The Palo Alto, Calif.-based company's shares jumped 76% on the day of its initial public offering in August.

But VMware shares were down less than 1% by midday, while Riverbed stock was off 27% at about $34. The company's stock had been up more than 50% since Jan. 1.

He noted that Riverbed is still a key player in its market and "the company offers the potential for ongoing attractive growth," but Mansky also cited decelerating top line growth and stiff competition from bigger rivals such as Cisco Systems Inc.
CSCO, -0.25%
and Juniper Networks Inc.
JNPR, -0.74%

"We anticipate the shares will likely require some time before regaining momentum status," he wrote.

However, analyst Gabe Lowy of Collins Stewart upgraded Riverbed shares to buy, saying the sell-off after the company's earnings announcement was "an overreaction."

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