Riverbed snaps up Zeus as EMEA sales slow

WAN optimisation vendor encounters "softness" in Europe as it announces two acquisitions

WAN optimisation vendor Riverbed has splashed out up to $140m (£87m) on UK traffic management specialist Zeus as it fell short of Wall Street expectations for its second quarter of 2011.

Riverbed will cough up $110m (£68m) cash upfront for Cambridge-based Zeus, which it claims pioneered the development of software-based application deliver controllers (ADC).

At the same time, the NASDAQ-listed firm announced it is acquiring web application optimisation outfit Aptimize for an undisclosed sum. Zeus and Aptimize will form the cornerstone of Riverbed's "asymmetric optimisation" strategy, the vendor said.

US-based Riverbed recently had a change of top management in EMEA and admitted its own execution was partly to blame for a poor quarter on this side of the pond.

Total revenue for the three months to 30 June rose 35 per cent year on year to $170.3m (£106m), which is below analysts' expectations. Net profit hit $11.3m (£7m), compared with $6.6m (£4m) a year earlier.

Jerry Kennelly, chief executive of Riverbed, said: "We experienced softness in the EMEA region, which we attribute to both the regional economy and our own execution.

"Looking ahead, we have confidence in our ability to improve our execution in this region with new EMEA sales leadership announced last week."

Zeus, whose ADC solutions are used by seven of the top 10 telcos, will become a business unit of Riverbed, led by former Zeus boss Jim Darragh. It will bag as much as an additional $30m cash if certain booking targets are hit over a 12-month period.

Zeus' solutions are designed for cloud and virtual environments and support a range of hypervisors, including VMware, Xen, HyperV and KVM.

Kennelly added: "According to industry analysts, the virtual ADC market is expected to grow about four times faster than the traditional ADC market over the next four years. Zeus is well positioned within this market as customers look for ADC solutions for public and private clouds that truly integrate into their application stack."