Riverbed Technology Inc. (RVBD) lowered guidance for its third quarter financial performance and, apparently to avoid another onslaught from Elliott Management LP, said it would explore strategic alternatives.
Riverbed said Thursday its third quarter revenues would fall between $276 million and $277 million, compared to previous guidance of $285 to $291 million. Earnings guidance was reduced from 30 cents to 32 cents per share to between 30 and 31 cents. Riverbed said the shortfall was due to lower growth in its WAN Optimization and virtual ADC businesses. The IT company will announce final third quarter results on Oct. 23 and hold a conference call.
Elliott Management, which holds 10.8% of Riverbed, has maintained a $21 per share takeover proposal for the company, including a go-shop offer, that Riverbed rejected in February.
Since Elliott has railed against the company's financial underperformance and failure to respond to either its offer or its shareholder's actions. In September, Riverbed said it was adding two members to its board as independent directors to increase the size of the board to nine members. At a May annual meeting, Riverbed shareholders did not elect Mark Lewis, the single board member standing for re-election after two other directors resigned. Riverbed rejected Lewis' resignation. The company has a poison pill.
Riverbed now says it will reduce annual costs by $20 million to $25 million, improve operating margins by 1% to 2% and explore strategic and financial alternatives. Riverbed did not disclose its financial adviser. For its 2012 acquisition of Opnet Technologies Inc., the company used Goldman Sachs & Co. for advice.
Elliott commended the Riverbed board for initiating a strategic review and that its team and advisers look forward to completing confirmatory diligence in an expedited fashion regarding its $21 per share offer. Elliott previously has engaged Moelis & Co. regarding its Riverbed proposal.
Elliott has previously said that Riverbed was shunning interest from other potential buyers, including private equity firms. Of those, Silver Lake Partners, Thoma Bravo LLC and KKR & Co. have been considered potential bidders.
Riverbed shares, which traded at roughly $15 prior to Elliott's approach through a November 2013 13D filing with the Securities and Exchange Commission, traded Thursday at $18.70, up 60 cents, or 3.4%.