Radware Rallies in App Switches

Application switching and security vendor Radware Ltd. (Nasdaq: RDWR) announced its first-quarter results today, posting revenues of $20 million, up 29 percent on the same period last year and near even with analyst estimates of $20.04 million.

Earnings per share were 22 cents on net income of $4.4 million. This was up from 14 cents and $2.8 million in the year-ago period. EPS was in line with analyst estimates.

The results were driven by sales of products that use Radwares SynApps architecture, according to execs on a conference call this morning. SynApps represented 28 percent of units shipped in the quarter, compared to 21 percent a year ago.

Radware CEO Roy Zisapel also gave a glimpse of the company’s future product roadmap during the call. After launching its Application Switch III device last February, the company has been working on a new appliance for a number of months (see Radware Racks Up Record Q4).

Zisapel confirmed that Radware will be entering the beta phase with a new application switch at the end of this quarter, and a new Layers 4 to 7 product will be launched later this year. The company is also planning to launch a new Intrusion and Prevention Service (IPS) product in the third quarter of 2005.The CEO also confirmed that the competitive landscape is changing in the security space. 3Com Corp. (Nasdaq: COMS), following its acquisition of TippingPoint Technologies Inc. last year, has now surfaced on the Radware radar, joining established security vendors McAfee Inc. (NYSE: MFE) and, to a lesser extent, Internet Security Systems Inc. (Nasdaq: ISSX), he said.

Last year 3Com coughed up $430 million for security vendor TippingPoint in an attempt to bolster its enterprise product portfolio (see TippingPoint Trucks On and 3Com Takes TippingPoint).

In last quarter’s earnings call, Zisapel confirmed that the company was facing stiff competition from F5 Networks Inc. (Nasdaq: FFIV). Today he noted that this situation had not changed significantly, with Radware mainly coming up against Cisco Systems Inc. (Nasdaq: CSCO) and F5 in the enterprise space.

This has been a tough earnings season for a number of vendors, and Zisapel acknowledged a “challenging spending environment” (see Foundry Faces Tough Times and Enterasys Gives Q1 Estimate). However, he added that Radware’s reliance on applications has helped the company weather the current financial storm.

”Organizations don’t spend money on networks, they spend money on running new network applications,” he said. “Since we’re tied to the application, we’re more immune to the budget cutting.”Nonetheless, the market was not exactly overwhelmed by Radware’s results. In early trading this morning, the company’s shares fell 44 cents (1.88 percent) to $22.95.

— James Rogers, Site Editor, Next-Gen Data Center Forum

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