October 21, 2010 / 9:11 PM / 9 years ago

UPDATE 2-Riverbed sees strong network biz on government spending

* Sees Q4 EPS $0.35 vs est $0.30

* Sees Q4 revenue $155-$158 mln vs est $146.1 mln

* Sets 2-for-1 split in form of stock dividend

* Shares rise 9 pct in extended trade (Rewrites; adds conference call details, analyst comment)

By Himank Sharma

BANGALORE, Oct 21 (Reuters) - Network equipment maker Riverbed Technology RVBD.O posted third-quarter results above market estimates on strong sales of network optimization products, and projected a strong fourth quarter, sending its shares up 9 percent after the bell.

Riverbed, which supplies software and hardware that enable high speed data transfer on closed networks, said it expects to report fourth-quarter revenue of $155-$158 million, with government contracts expected to rise.

During the third quarter, 21 percent of the company’s product revenue came from government contracts.

Soleil Securities analyst Michael Genovese said the industry outlook remains strong with enterprise spending expected to rise.

“We can expect larger deployments with recurring purchases in the enterprise (segment),” he said.

For the fourth quarter, the company expects to earn 35 cents a share, excluding items.

Analysts are expecting the company to earn 30 cents a share on revenue of $146.1 million in the period, according to Thomson Reuters I/B/E/S.

The company, which competes with Blue Coat Systems BCSI.O, posted third-quarter adjusted earnings of 34 cents a share, which compares with market expectations of 28 cents a share.

Revenue rose 45 percent to $147.8 million in the period. Product revenue rose 48 percent, while support and services revenue grew 38 percent. [ID:nASA00V8U]

The company additionally announced a 2-for-1 stock split in the form of a stock dividend, Thursday.

The San Francisco-based company’s shares, which have gained nearly 50 percent in value since it reported second-quarter sales in July, were up an additional 9 percent at $50.18 in trading after the bell.

Since July, the Dow Jones Telecom Equipment Index .DJUSCT had gained 7 percent in value. (Reporting by Himank Sharma in Bangalore; Editing by Anne Pallivathuckal)

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