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Redback Sneaks Out Gloomy Forecast

Firms that put out a press release about financial or legal affairs at the last minute before a public holiday might just as well broadcast an email to the world saying: "Here's some news we hope you don't see."

So it was that Redback Networks Inc. (Nasdaq: RBAK) issued a press release about its projected second-quarter revenues at 18:40 Eastern time (15:40 Pacific) on Thursday, (see Redback Sees Q2 Slide).

The vendor is projecting revenues of just $22 million for its latest three-month period (ended June 30), down from $29.5 million in the first quarter (see Redback Reports $24.9M Loss). According to figures from Thomson First Call, analysts had, on average, been expecting second-quarter revenues of $30.7 million.

Redback, of course, was not available for comment today.

Redback's share price fell by 3 cents on Thursday, to close at 91 cents. Of course, the market had closed before the press release hit the wires, so it could be a stock to watch when the market opens again Monday.

Redback's is capitalized at $166.4 million and has a 52-week high of $2.00, with a low of 24 cents. Its revenues for the whole of 2002 were $125.6 million (see Redback Trims Losses, CFO).

— Ray Le Maistre, International Editor, Boardwatch

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BobbyMax 12/4/2012 | 11:48:12 PM
re: Redback Sneaks Out Gloomy Forecast Redback came into exibasically doing the same thing stence when thousands of router companies and various incarnations. These companies wanted to immitate the Cisco model of generating stock prices by acquiring companies that had no substantial technology. At the time Redback was founded many companies were emerging california like barns. This simply means it was difficult to differeentiate these companies. The only difference between these barns was the placement of the exit door.

Late 1990s was one of the worst times in our high tech industry that gave birth to dotcom companies and other spurious semiconductor companies exactly doing the same thing.

To make things worst for Redback, it acquired Siara Network for about $5 Billion. Siara Network did not have much of anything and Redback overpaid. Another unfornute things that Redback, without any thinking and deliverations appointed Mr. Raghvan as its President and CEO. Te company started withering away and never recovered for the huge amount it had to pay for Siara.

I think Redback would continue to exist in the samay Xerox, 3Com, and Novell have existed.
Shazbot 12/4/2012 | 11:48:11 PM
re: Redback Sneaks Out Gloomy Forecast California>>>Barns?? What the hell is Boobymax talking about? I think he is smoking crack again.
rjmcmahon 12/4/2012 | 11:48:10 PM
re: Redback Sneaks Out Gloomy Forecast What the hell is Boobymax talking about?

Rereading his post may help us understand the message he was attempting to convey. Many may not agree with the perspective but trying to understand is the right thing to do.

At the time [your name here] was founded many companies were emerging [in] California like barns. This simply means it was difficult to differentiate these companies. The only difference between these barns was the placement of the exit door.

My interpretation is that during the mania most companies weren't unique nor diverse, and rather people were herding togther in the hopes of getting some of yesterday's harvests.

On the topic of barns, a more interesting anecdote begs the question, "If the farmer did become a bird why would he not behave just like the flock?"

http://theory.stanford.edu/~ol...

There's the story of the farmer living through a cold, snowy Midwestern winter, looking out the window and seeing a flock of birds on his farm. They huddled together, shivering from the snowy cold. With his heart touched, he knows his heated barn has plenty of room for these birds. So he puts on his coat, opens the barn doors, and waits for the birds to enter the barn. He waits and waits, but they do not see the open barn doors. They continue to shiver outside. Next, he grabs some bird seed and makes a trail to the barn, but the birds fail to see the small seeds, lost among the snow. Next, he comes behind the birds and tries to shoo them into the barn, but they fly in the opposite direction to regather into their shivering mass.

The farmer thinks to himself, ``If only I could be a bird, I could show them the warm barn.''
rjmcmahon 12/4/2012 | 11:48:09 PM
re: Redback Sneaks Out Gloomy Forecast The story of the birds and the barn was written by Jeffry D. Oldham. Forgot to give him the credit deserved.

http://theory.Stanford.EDU/~oldham/

It's nice to discover such human talents while sitting at one's computer.
gea 12/4/2012 | 11:48:09 PM
re: Redback Sneaks Out Gloomy Forecast BobbyMax:

All your base are belong to us.
atmguy 12/4/2012 | 11:48:08 PM
re: Redback Sneaks Out Gloomy Forecast
Very informative! Thanks.

lightreceding 12/4/2012 | 11:48:08 PM
re: Redback Sneaks Out Gloomy Forecast Redback came in to existence to exploit a shortcoming in Cisco routers that made them unsuitable for broadband session aggregation.

Redback was founded about the time DSL started taking off by a group of technolgy people who recognised the opportunity to take a niche market by exploiting a flaw in Cisco products. Session aggregation required the capability to terminate thousands of ATM PVCs. Cisco routers had an artficial limitiation in PVC count as a result of shortsighted coding of IOS and could only terminate a few hundred sessions per port.

The Redback Subscriber Management system was built with a number of innovative features for broadband session termination including the capability to terminate thousands of sessions per port.

After waking up from their slumber and realizing that a little startup was seriously cutting in the their market share for broadband access Cisco hacked together a product from the parts bin to compete with the largest product from Redback, the SMS 10000 and they added session management to a train of IOS for the smaller routers, the 7200 and later the 7400 to compete with the Redback SMS 500 and 1800.

Later various companies copied and built upon the Redback SMS concept, including Shasta, acquired by Nortel and the Unisphere, acquired by Juniper.

Redback has a unique place in the history of high tech as it was first to market with a broadband aggregator, created a new product category, stole marketshare from Cisco, was one of the top ten IPOs, and top ten growing companies of the boom and reached a market cap of over $20 billion while barely profitable. Redback made a lot of stock option millionaires.

Cisco should have seen the need for a broadband remote access server coming. Lucent could have been first with a device built upon the Portmaster 4 from Livingston, but internal confusion stopped this from happening and Lucent went about acquiring products and then killing them with political smothering. Ascend was too busy selling the company to Lucent and then bailing with the money to build a BRAS. They did leave Lucent with the Stinger IP DSLAM which had some success but even that is floundering as the buildings in Alameda sit mostly empty.

Redback did not pay for Siara. They issued stock for it. The price was a sign of the boom. The deal was probably a legacy of Vinod Khosla who had invested in both companies. Since Siara was late to market with their product, a god box called the SmartEdge, it was probably easier for him to merge Siara in to Redback and take some of the soaring Redback shares, than to do an IPO.

The CEO who took Redback public, Dennis Barsema, left shortly after the merger and Redback was left with Vivek Ragavan, a guy with no notable success to his name, who was beholded to Vinod. Randall Kruep the sales VP who led Redback against Cisco and others, left after being looked over looked for the CEO position in favor of Vivek, and Redbacks fortune started sinking.

For almost the last couple years Redback has been run by a group of cronies who were ousted from Cisco after Chambers woke up to the goings on in the Service Provider business unit and did a total reorganization including sending Sr. VP Kevin Kennedy on his way.

walter_100 12/4/2012 | 11:48:07 PM
re: Redback Sneaks Out Gloomy Forecast lightreceding,
Excellent post! Keep it coming!
rjmcmahon 12/4/2012 | 11:48:04 PM
re: Redback Sneaks Out Gloomy Forecast Good post from the perspective of one in the trenches.

Now, a perspective from the outside asks:

o How was the DSL infrastructure going to enable a competitive marketplace?
o What goods and services did the DSL really enable?
o How much money did the RBOCs put into folks like Redback and Covad?
o Wouldn't their primary interests of these guys be that of sabotage?
o Didn't the same thing happen with the cable cos and [email protected]?

Weren't these fraudband technologies nothing but a big lie to the public investor, if only in hindsight? And would not the experienced control investors understand these issues beforehand or were they really duped by a bunch of lobbyists and politicians?

Nobody should invest in our industry until we learn to value honesty and integrity, in my opinion. And the current wireless hype is nothing but more BS.
single mode figure 12/4/2012 | 11:47:57 PM
re: Redback Sneaks Out Gloomy Forecast The historical analysis by Mister Max belongs in our national archive, strikingly like the founding fathers writing with a hint of Napa-Sonoma Cabernet, certainly a writing for and of our time blended with the ancient sandskrit...

Are you related to Peter Max..
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