Redback in Options Probe
The company announced late on Friday that it had received a subpoena from the United States Attorney for the Northern District of California requesting documents related to its "historical stock option practices." It also said the Securities and Exchange Commission (SEC) has made an informal request to view the same information.
Redback's announcement came just two days after Foundry Networks Inc. (Nasdaq: FDRY) and VeriSign Inc. (Nasdaq: VRSN) made almost identical announcements. (See Foundry, VeriSign in Stock Option Probes.
Other telecom firms caught up in the growing investigation into "backdating" -- the retroactive alteration of stock option grant dates to coincide with low share prices –- include Broadcom Corp. (Nasdaq: BRCM), Juniper Networks Inc. (NYSE: JNPR), SafeNet Inc. (Nasdaq: SFNT), and Vitesse Semiconductor Corp. (Nasdaq: VTSS). (See Backdating Blues.)
More than 50 publicly-listed companies, including data center operator Equinix Inc. (Nasdaq: EQIX), Apple Inc. (Nasdaq: AAPL), and CA Technologies (Nasdaq: CA), are now embroiled in various backdating inquiries.
News of Redback's investigation could add to the volatility of its stock when Nasdaq trading starts Monday. The router vendor's share price has had a turbulent few weeks, starting June at $24.16 and closing the month at $18.34, and hitting a month low of $17.01 on June 27 on concerns that the second half of the year might see a pause in the company's growth. (See Redback Shares Stumble.)
But the past month doesn't reflect the vendor's stellar performance during the past 12 months. Its share price has climbed from a 12-month low of $6.31 as revenues have ramped following deployments at major carriers such as BellSouth Corp. (NYSE: BLS), though even annual and sequential quarterly growth has sometimes left investors feeling a tad nervous. (See Redback Results Fail to Impress, Redback Hits the Numbers, Profits, and Wild Ride for Redback Shares.)
That growth and future potential has helped put Redback at the top of at least one analyst's chart of companies likely to be acquired. (See Arris, Redback Top Merger Scorecard.)
— Ray Le Maistre, International News Editor, Light Reading