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Amid Mixed Results, Riverbed Buys Zeus, Aptimize

Rated by Gartner as a leader in the wide area network (WAN) optimization controller (WOC) market, Riverbed Technology has announced mixed financial results and a pair of acquisitions.

For its latest fiscal quarter, the company reported year-over-year 38% product revenue and 83% operating profit growth. Revenue was $170.3 million, up 35%, while GAAP net income was $11.3 million. While earnings were in line with expectations, revenues fell far short of the estimates of $182.86 million and shares fell more than 20% in after-hours trading.

The company also announced the acquisitions of Zeus Technology (United Kingdom), high-performance application delivery control for virtual and cloud environments, Aptimize (New Zealand), web content optimization. According to Riverbed, these companies enable asymmetric optimization of applications and web content, and are "highly complementary" and will allow Riverbed to be a more strategic vendor to customers.

A pioneer in the development of software-based, highly scalable application delivery controllers (ADCs), Zeus will become a new business unit led by its CEO, Jim Darragh. Its virtual ADC (VADC) reportedly delivers the highest performance and supports the broadest range of hypervisors, including VMware, Xen, HyperV and KVM. It also has more than 1,500 customers worldwide, including seven of the top 10 telcos, a majority of leading cloud service providers, major broadcasters, and top media and e-commerce companies. Riverbed, which will pay $110 million in cash and up to another $30 million conditionally, says the virtual ADC market is expected to grow four times faster than the traditional ADC market during the next four years.

No details were available on the price for Aptimize Limited, with approximately 150 customers, which will become Riverbed's new web content optimization product group, led by former CEO Ed Robinson. Often deployed in tandem with WOCs and ADCs to enhance performance, the Aptimize Website Accelerator eliminates Web application inefficiencies by transforming the content (JavaScript, cascading style sheets, images, and so on) in real time. No extra hardware, code or browser changes are needed to accelerate websites or intranets up to 400% with a software installation on the web server.

During yesterday's earnings call, Eric Wolford, Riverbed's executive VP responsible for the product portfolio, said the acquisitions extend the company's ability to more comprehensively address performance problems, as well as optimize an even wider range of applications and use cases. "The combination of Zeus' virtual ADC and Aptimize's Web Content Optimization creates a differentiated and powerful software-based asymmetric solution that is more scalable and more flexible than any product available now. Looking farther into the future, we see an even greater potential benefit to offering a best of all worlds, fully integrated application delivery web content and WAN optimization solution."

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