Riverbed Acquires Cace Technologies to Strengthen Cascade Business
Riverbed Technology acquired Cace Technologies, adding packet capture and analysis tools for wireless and wireline networks to its WAN optimization portfolio, the company said.
The acquisition was announced on Oct. 21 and Riverbed's senior executives discussed the deal on its third-quarter results earnings call.
Riverbed did not give any financial specifics, but Randy Gottfried, Riverbed's chief financial officer, said the Cace acquisition cost a "modest amount," of "less than $20 million."
Riverbed plans to retain all 20 of Cace Technologies employees, said Gottfried. Cace will be "tucked in" and managed by the Cascade business unit, according to Jerry Kennelly, Riverbed's president and chief executive.
Cace's high-speed packet capture, visualization and analysis tools will allow Riverbed's Cascade business unit to expand into the application-aware network performance management market, said Kennelly on the call. It was an area "adjacent to WAN optimization," Kennelly said.
The increased interest in cloud computing means companies need a way to effectively manage the wide area network to find bottlenecks and performance issues, the company said. Cace's Shark appliance and Pilot console discover applications on networks, monitor performance and record traffic for later analysis.
"They make...a DVR-type functionality called Packet Capture and Analysis that we needed to add" to compete better in the WAN performance management market, Kennelly said.
The combination of WAN optimization and network performance management will further enhance Cascade's growth, said Kennelly. Cascade accounted for 5 percent of total product revenue for the third quarter, said Gottfried.
Cace is also the corporate sponsor of the popular Wireshark and WinPcap open source packet analysis tools. Riverbed said it is committed to keeping Wireshark open.
"Everyone I've talked to at Riverbed from the CEO and CTO on down is committed to Wireshark and to its community. They realize we have a good thing going and they want to keep it that way," wrote Gerald Combs, the analyzer's original author, on the official Wireshark blog.
"Quite candidly," it's faster to buy a great product and add it to the Cascade family, and go after the "adjacent market more completely," Kennelly said, adding, "We very much value the Wireshark relationship."
The combination of Cace and Cascade will create a complete application with network performance monitoring, business mobile discovery, end-to-end performance monitoring, and the ability to dive deep into packet-level analysis, positioning Riverbed to compete in the adjacent application-aware network performance management market, said Kennelly.
Estimated to be a $3.5 billion market in 2010, the market is "under-penetrated and growing rapidly and we will enter it with a highly competitive product and the solid team supporting it," said Kennelly.
Riverbed had a strong third quarter, reporting revenues of $147.8 million, with profits of 34 cents a share, well ahead of the Street consensus at $135.3 million and 27 cents. Revenues were up 17 percent since the second quarter, and up 44 percent compared to third quarter of last year. The company also announced a two-for-one stock split, to be issued Nov. 8 to holders of record on Nov. 1.