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I think very short term when I look at the financials of any technology company. Things are changing so fast that competition can quickly overtake any companies market.

A small start up with a groundbreaking technology or innovation can show up at any moment to bring down even the largest of companies. It’s happened before and it can happen very easily again. That is why I am concerned about Riverbed Technology’s outlook and their falling stock price. I would not put this as among the stocks to buy in my portfolio.

Their stock fell 18% down to $24.45 at the close of trading. Even at that stock price, we are looking at a P/E of 72. There is a lot of expectations for growth baked into the earnings multiple. It’s a growth rate that I’m not certain this company can sustain. Even if they could, it’s one that can easily be overturned by competition.

Their net profit margins were relatively high 10 percent but that is going to change this year. The company announced that their upgrade costs will cut into that number. Remember, this is technology. They will have to upgrade their hardware and software on a regular basis to keep up.