It may not be far from the truth to say that the days after earnings releases are some of the worst days in the calendar for tech investors. Many tech stocks trade on hype and hope, and earnings reports have a tendency to bring a little reality back to the picture and prompt investors to reconsider the multiples they're paying.

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Such would seem to be the case for the trio of Riverbed (Nasdaq:RVBD), Fortinet (Nasdaq:FTNT) and F5 Networks (Nasdaq:FFIV). None of these companies had what would normally be called a bad quarter, but each sported hefty valuations and expectations. Now, with calendar second quarter earnings in hand and a few worries about growth momentum, these stocks have all come under heavy selling pressure.

A Review of the Quarters
Riverbed is arguably in the worst financial shape relative to stretched expectations. The company has now reported two straight "weak" quarters. Although 35% year-over-year (YOY) growth is not generally considered weak, sequential growth was 4% and followed a Q1 that was down 5% sequentially.

Growth was definitely hurt by poor performance in Europe, and that likely had something to do with the company losing its head of sales for Europe at the start of the quarter. Now there are worries as to whether the core WAN optimization market is still growing strongly, and whether Riverbed can continue to build its share after largely marginalizing Blue Coat (Nasdaq:BCSI). Still, this is a company where margins (gross and operating) continue to expand, and where sales growth expectations are well above average.

Fortinet Not So Formidable
Most companies would be happy to report 35% YOY revenue growth and 22% billings growth, but this marks the first time Fortinet's billings were below the midpoint of guidance. Like Riverbed Europe, this was a disappointment. But also like Riverbed, this is a company serving a growing market and carrying robust revenue growth guidance. Even allowing that rivals like Check Point (Nasdaq:CHKP) could try to get into their kitchen with similar devices, there is quite a lot of data security spending to go around right now.

F5 Rattles Again
It sometimes feels like investors are just waiting for F5 to screw up and pronounce an end to its impressive run. This time around, F5 delivered "only" 26% in-line revenue growth. True, product revenue growth is decelerating, but it is still running at a pace of 21% annual growth and over 3% sequential growth. F5 makes it three-for-three in companies seeing weak results from Europe.

A Common Threat
While these companies address different markets, they have a common problem: fears of a newly resurgent Cisco Systems (Nasdaq:CSCO) - and, to a lesser extent, an expansion-oriented Juniper (NYSE:JNPR). Given the dismal revenue performance at Cisco of late and the large-scale layoffs, this would seem to be an overstated fear. True, Cisco may well try to re-grow share in WAN optimization (Riverbed), develop its own unified security appliance (Fortinet) or regain leadership in application delivery controllers (F5), but all of these companies succeeded in part by developing a more appealing mousetrap and then leveraging the heck out of it.

Can Cisco go back to the lab and develop better products? Certainly. Can it simultaneously develop several new best-of-breed products and regain share in multiple markets? That seems like a stretch, particularly as there is not a lot of history in tech of yesterday's winners slipping and then regaining the top spot.

The Bottom Line
More than anything, the poor reaction in these companies' stocks seems like the result of an all-too-familiar trend in tech investing. Investors will simply ignore multiples and valuation when growth is strong and accelerating, but the first sign of faltering growth sends them rushing to click the "Sell" button. What's more, with the "European problem" likely not turning around right away and growing worries about the sustainability of the U.S. recovery, a lot of growth-tech investors may move to a more skeptical "show me the growth, then I'll buy" footing.

That, in turn, should make these stocks quite volatile for the next couple of quarters. Unfortunately, for value investors there aren't any truly cheap names in the bunch (F5 at least seems to trade below fair value), so this is still really a party just for growth stock investors. (For additional reading, see A Primer On Investing In The Tech Industry.)

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