Redback Bleeds Red

The results for Redback Networks Inc.'s (Nasdaq: RBAK) fiscal quarter ending March 31, 2001, were pretty bad, but not quite as bad as expected (see Redback Hits the Wall).

In fact, Redback’s net revenues for the quarter, even with its recently lowered expectations, were still a 166 percent improvement over its year-ago results. Net revenues were $90.9 million, compared with $34.2 million for the year-ago quarter. Earlier this month, Redback had warned that revenues for its first fiscal quarter would only be between $85 and $90 million.

Nonetheless, the numbers were pretty grim. Redback CFO Dennis Wolf pegged the quarter as "among the most challenging the company has ever had."

The company’s pro forma net loss -- which doesn't include pesky things such as acquisition-related charges, stock compensation charges, restructuring, and certain inventory charges -- was $18.4 million or $0.13 per share. That’s a little bit better than the 15 cents a share loss it expected earlier this month.

But when you add in all the stuff taken out of the pro forma number, Redback’s net loss for the quarter was actually $400.5 million or $2.92 per share. Its actual loss for the year-ago period was $85.2 million or $0.96 per share.

Even Redback’s pro forma number is still far short of the 5 cents a share profit it was originally expected to post. It’s also a disappointment, considering that Redback posted a pro forma profit of a penny a share for the year-ago period.

Redback says it added more than 20 new customers during the quarter, and its customer roster for its subscriber management system (SMS) is now more than 300. That said, Redback's three largest customers are Qwest Communications International Corp. (NYSE: Q), Verizon Communications (NYSE: VZ), and Williams Communications Group (NYSE: WCG), and the company has no exposure to vendor financing.

The company expects revenues for its second quarter to be flat and revenues for the whole year to be between $400 million to $425 million, with the company breaking even in about six months.

Though Redback execs expressed optimism in the overall growth of its potential metro optical market share, Wolf added that the firm's optimism was "predicated on the assumption that market conditions do not continue to deteriorate."

In other words, stay tuned.

-- Phil Harvey, Senior Editor, Light Reading http://www.lightreading.com
cd 12/4/2012 | 8:34:20 PM
re: Redback Bleeds Red Those were the words of the CEO in January.
Now gross margins are below 50%, DSOs around 90,
big rise in inventories, loss for the forseeable
future. Now, how do we trust these jokers when
they say sequentially they will be flat? All their
key numbers point downwards
optfresher 12/4/2012 | 8:34:16 PM
re: Redback Bleeds Red "The company expects revenues for its second quarter to be flat and revenues for the whole year to be between $400 million to $425 million?"

market conditions ?
anything shown express it would be better?

sntwk 12/4/2012 | 8:34:13 PM
re: Redback Bleeds Red Juniper, Redback and for others including cisco, it would be nice if LR can analyze the reported income/revenue to see if it contains any $ from sales of their investments.

I just notices on Yahoo for ONI that Brocade sold millions worth stock and what if they report that as income and not real product revenues?
StartupGrunt 12/4/2012 | 8:31:57 PM
re: Redback Bleeds Red > market conditions ?
> anything shown express it would be better?

Redback is in the same boat as everyone else. The fact is everything got way overheated last year and ended up building far more inventory than they had sales for. The question is are they strong enough to not only survive but not have to scale back R&D until the orders start picking up again?

Redback has no more control over that than the Seattle city council has over Mt. St. Helens.
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