Riverbed Announces Restructuring Plan

Friday Oct 10th 2014 by Sean Michael Kerner
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WAN optimization vendor is looking to cut its costs as it lowers its financial outlook.

Riverbed Technology didn't perform financially as it had initially forecast, for the third quarter of 2014.

The WAN optimization vendor revised its financial outlook and released preliminary results for its third quarter of fiscal 2014. Revenue is currently expected to fall in the range of $276 million to $277 million, a decline from the $285 million to $291 million range it had previously forecast.

Going a step further, Riverbed announced that it is starting a restructuring plan that will see it cut its annual costs by up to $25 million. Riverbed expects to have its restructuring actions completed by the end of the calendar year.

"In light of current business conditions, we are taking decisive steps to improve our cost structure in order to drive enhanced operating performance," Jerry M. Kennelly, chairman and CEO, Riverbed, said in a statement. "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."

Going a step further, Riverbed announced that it is undertaking a full review of its operations to "enhance shareholder value."

At the beginning of the year, hedge fund manager Elliott Management bid $3 billion to acquire Riverbed. It's a bid that Riverbed's management ultimately rejected.

Elliott Management is still interested in Riverbed and has commented on the company's restructuring announcement.

"We commend the Board for initiating a strategic review and believe that Riverbed is a great company with products customers value," Jesse Cohn, portfolio manager at Elliott Management, said in a statement. "We have made a $21 a share bid for the company, and our team and advisors look forward to completing our confirmatory diligence in an expedited fashion."

Over the course of 2014, Riverbed has rebranded and expanded its product portfolio.

Riverbed's second quarter financial results showed some potential challenges in the company's strategy. At the time, Kennelly noted that one key challenge is Riverbed's transition to having a multi-product lineup.

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.

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