During that period, the stock dropped to as low as $13. Today, it is back at the $20 level with no fundamental improvements within the company. Even more disappointing is the fact that management does not appear to have a firm handle on how to fix its issues. From an investment standpoint, the stock sports a price-to-earnings ratio of 51 while both Cisco and HP offer better value with P/Es of 12 and 7, respectively.
For Riverbed to justify this level it has to show that it can consistently maintain its gross margins and product margins, which have been on a decline recently. I just don't see how it can do it.
Meanwhile it would seem that the market continues to ignore these challenges and yet expects more from Riverbed and F5 while Cisco and HP (although not as dynamic) present better value, while also offering some safety by providing decent dividends yields.
At the time of publication, the author was long AAPL and held no position in any of the other stocks mentioned.This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
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