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Rocky Times For Redback?

Light Reading
News Analysis
Light Reading
4/12/2000

Could Redback’s incredible run of success in the subscriber management market be set to unravel?

The company faces four challenges to maintaining or extending its market hegemony.

· Its products are based on PC technology. Critics say this gates performance
· It may be losing at least one major customer account: UUNET
· It needs to integrate its products with those from Siara – a company it recently acquired (tricky, given that Siara doesn’t have product yet)
· A hot new startup is readying a ‘Redback killer’
Of course, the prognosis isn’t all bad for Redback http://www.redback.com. In its favor it has a big 'first mover' advantage, more than 180 customers, and field-proven software. Also, its recent acquisition of Siara, an optical networking startup, gives it access to a huge pool of top-flight engineers.

Redback also announced earnings today. They're up from $26.1 million in the fourth quarter of 1999 to $34.2 million in Q1 2000, but still have a long way to go before they begin to justify Redback's $10 billion market capitalization.

In the mean time, some are wondering whether Redback’s success to date might be built on sand. “It’s really not a good idea to build a big stock price on a flimsy foundation,” says Deb Mielke, an analyst at consultancy Treillage Network Strategies Inc. http://www.treillagenet.com.

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