Why couldn't the ANALysts predict this last week <G>....?
Riverstone Shares Rally More on Metro-Market Focus
Wed Mar 6, 1:45 PM ET
SAN FRANCISCO (Reuters) - Shares in Riverstone Networks Inc. on Wednesday rose more than 16 percent as investors snapped up the battered stock, expecting the company to recover sooner than other network gear makers, analysts said.
Riverstone shares in the afternoon traded at $5.82, up 82 cents, or 16.4 percent. The shares on Tuesday gained 7.8 percent and on Monday rose 13.4 percent -- after losing half their value in one day last week.
Investors dumped Riverstone shares on Feb. 28 after the company warned it would miss fourth-quarter earnings estimates as the slump in the telecommunications market deepened.
Investors punished Riverstone because it was seen as a safer play among network gear makers, whose sales have plunged amid a brutal downturn in the telecommunications market.
Riverstone's gear is used in urban networks, markets where carriers are expected to boost capital spending to tap pent up demand from businesses and consumers eager to get online.
By contrast, the long-haul, long distance segment of the network market offers little hope for immediate growth to gear suppliers because of an equipment inventory glut.
Investors have been rethinking last week's sell-off in Riverstone shares, analysts said.
"It was just oversold for the most part," said Erik Suppiger of Pacific Growth Equities. "We kept a buy rating because it's a good fundamental play for intermediate to long term investors because the metro market is a strategic focus for major carriers."
In a research note on Tuesday, Salomon Smith Barney analysts wrote they had met with Riverstone President and Chief Executive Romulus Pereira and concluded that the company's metro-market focus positions it to be among the first networkers to recover.
"Riverstone's near term problems are related to weak end markets not to issues with the company's products, competitive position or future opportunities -- simply weak end markets," the analysts wrote.
"We think they are building a head of steam with key accounts," the analysts added, noting they believe that broadband service providers "are likely to continue to gravitate to Riverstone...In our opinion, the only question is one of timing." |
