Riverstone shares jump on improved outlook
Friday August 16, 5:48 pm Eastern Time
Reuters Company News
SAN FRANCISCO, Aug 16 (Reuters) - Shares of Riverstone Networks Inc. (NasdaqNM:RSTN - News) jumped 30.6 percent on Friday as investors jumped on what they saw could be an undervalued stock and concerns eased over the sales outlook for the communications network gear it makes, analysts said. ADVERTISEMENT
Shares of Riverstone gained 26 cents to close at $1.11 on the Nasdaq.
Goldman Sachs in a research note said the battered stock at its Thursday closing price of 85 cents traded well below its net cash value of $1.92 per share. Riverstone shares hit an all-time low of 73 cents a share this week.
Additionally, concerns diminished over Qwest Communications International Inc.s (NYSE:Q - News) outlook as the telephone company's efforts to get its finances in order could signal that its spending on network equipment will improve, analysts said.
Qwest, the biggest local phone company in 14 states and which is $26 billion in debt, met this week with lenders about amending terms of a $3.39 billion loan. Qwest shares closed at $1.93, up 40 cents, or 26.1 percent, and up 55.6 percent from their prior Friday closing price of $1.24.
"Qwest looks like it's not going to go bankrupt soon," said Aalok Shah, an analyst with Pacific Crest Securities.
If Qwest's cash-crunch eases, it may be able to increase spending on network gear, which could trigger more spending by rivals, said Reginal King, an analyst with WR Hambrecht+Co.
"To remain in business they'll need to accelerate growth," King said. "To do so they'll likely look for high return-on-investment technology."
Carriers slashed capital spending amid a harsh industry downturn, hammering shares of once high-flying network gear makers. The American Stock Exchange Network Index (AMEX:^NWX - News), an industry proxy, is down 91 percent from its all-time high in September 2000.
Goldman Sachs on Friday started coverage of Riverstone with a "market performer" rating. While finding Riverstone shares "attractive," Goldman Sachs said "broad telecom weakness" is a concern for the company over the near term |
