Riverstone seen giving strong guidance with Q3 results
SANTA CLARA, Calif., Dec 18 (Reuters) - Network router maker Riverstone Networks Inc. (NasdaqNM:RSTN - news) is expected to give positive guidance when it reports third-quarter results on Wednesday, in a climate of investor optimism over equipment sales to urban markets, analysts said.
Riverstone in October said it expected third-quarter revenues to grow 6 percent to 10 percent to between $58.6 million and $60.6 million, which would produce earnings in the 1 cent to 3 cents per share range expected by analysts.
Analysts polled by Thomson Financial/First call on average expect Riverstone to post third-quarter earnings of 2 cents a share, excluding charges, on $59.4 million in revenue.
Analysts see Riverstone meeting those expectations and providing upbeat guidance on more near-term growth.
``The company has talked about the first half of 2002 for build-outs of metro networks by large carriers in the U.S.,'' said Peter Andrew, an analyst with A.G. Edwards & Sons Inc.
Riverstone shares traded on Tuesday afternoon at $18.16, up 271 percent from a year-low of $4.89 on Oct. 1. By contrast, the Nasdaq Composite index (^IXIC - news), trading at 1,992.65 on Tuesday afternoon, has gained 44 percent from its year-low of 1,387.06 on Sept. 21.
Shares of Santa Clara, California-based Riverstone were initially lifted by the expectation that networking companies would benefit during a possible economic rebound and a general jump in investor interest in the technology sector.
More recently the stock has also been boosted by the company's emphasis on selling products into the ``metro market'' -- cities and suburbs which, unlike saturated long-haul telecommunications markets, are still shopping for communications equipment.
``It's the one part of the telecommunications network that hasn't had a big upgrade in capacity,'' said William Becklean of Commerce Capital Markets.
Spending on metro networks will also likely remain healthy as telecommunications companies seek to bring new services to consumer-heavy urban markets, said Pacific Growth Equities analyst Erik Suppiger.
``The metro-area network is one of the biggest, if not biggest, impediment to customers gaining broadband bandwidth access,'' Suppiger said. ``The metro area also is where carriers are adding value-added services.''
Morgan Stanley last week raised its 12-month target price on Riverstone shares to $20 from $16, anticipating that the company's revenues will meet the firm's expectations. Analyst Christopher Stix wrote that Riverstone's third-quarter results were ``likely to be in line with or slightly above our estimates of $60 million revenue and 3 cents EPS.''
Ibexx
PS: should bode well for other metro issues such as CIEN and ONIS |
