|Jerry Kennelly, CEO of Riverbed Technology|
SAN FRANCISCO ( TheStreet) -- Analyst firm IDC estimates that global revenue from cloud services could grow from $17.4 billion in 2009 to $44.2 billion in 2013. That's good news for networking hardware firm Riverbed ( RVBD), which is preparing to launch a major cloud onslaught. Earlier this week, Goldman Sachs' latest IT spending survey cited Riverbed as one of the biggest gainers in the communications equipment market. Riverbed, it added, is well positioned for 2010, thanks largely to its cloud efforts. Riverbed CEO Jerry Kennelly, looking to nip at rival Cisco ( CSCO), took a break from trash-talking the competition on a recent visit to TheStreet to outline Riverbed's cloud strategy.
"Cloud is coming like a freight train," he said. "A lot of the cloud push will come from service providers." Kennelly added that over the next 18 months, Riverbed will release four new products -- both software and hardware offerings -- targeted at cloud computing. Riverbed touts its Steelhead appliance as a way to speed up traffic across networks. In November, the company launched a virtual, or software-based, Steelhead aimed at service providers and enterprises building cloud infrastructure. Cloud services, which offer compute power and storage via the Internet, are fast becoming one of the tech sector's hottest technologies. Companies like IBM ( IBM), Microsoft ( MSFT) and EMC ( EMC) are all pushing cloud technology as a way for firms to avoid the upfront costs of hardware and software. Arguably the best-known cloud specialist is Amazon ( AMZN), with its EC2 and S3 compute and storage services. Amazon, along with AT&T ( T), BT ( BT), Orange Business Services and IBM, was present at Riverbed's Virtual Steelhead launch last year, so it seems that Riverbed is gaining a foothold in the cloud market.
Riverbed, which competes with Cisco, F5 Networks ( FFIV), and Juniper ( JNPR), has seen its stock rise more than 130% over the last 12 months. The company's shares, however, dipped last week after BofA/Merrill Lynch downgraded the stock on a valuation basis. Riverbed fell 49 cents, or 1.72%, to $27.93 in Friday trading. The San Francisco firm reports its first-quarter results next month, and is expected to continue its recent revenue momentum. Analysts surveyed by Thomson Reuters expect Riverbed to report revenue of $108.47 million and earnings of 18 cents a share, up from $88.2 million and 13 cents a share in the prior year's quarter. "We haven't given full-year guidance, but our pipeline is as robust as it has ever been," added Kennelly. "Our sales reps are emanating much more confidence than they were at this time last year." Riverbed grew its sales 20% between 2008 and 2009, and Kennelly says that his firm is taking market share from its better-known competitors. "The recession helped us -- brand loyalty weakened," he said, adding that Cisco is also distracted by its push into new areas such as servers and storage. "They are lusting after the growth that IBM and H-P have." -- Reported by James Rogers in New York Follow James Rogers on Twitter and become a fan of TheStreet.com on Facebook.