Redback's 10Q Confusion
NEW YORK--Redback Networks Inc. (Nasdaq: RBAK) CFO Craig Gentner, speaking to investors here at the UBS Warburg Global Telecom Conference, tried to clear up some confusion about a Redback 10-Q quarterly earnings statement filed with the Securities and Exchange Commission today.
That filing was apparently the source of a mini-panic among investors, who commenced a brutal selloff of Redback stock in the late morning, following the release of the 10-Q statement, according to several sources. In the statement, Redback disclosed that it had sold $5 million in receivables to a third-party lendor because an unnamed customer had requested that payment be delayed. Some investors took this to mean that Redback was restating its quarterly results.
Gentner said the 10-Q reflects the same results discussed in the conference call several weeks ago and that nothing has changed in the quarterly results. He explained that rather than financing the sale of the $5 million in equipment, the company preferred to sell the receivables to a third party that was willing to finance the customer. So Redback received $5 million in cash while the customer equipment was financed by the lendor. Redback does not typically finance equipment purchases, said Gentner, but the customer needed to move its purchase into the 2001 budget and found a bank that was willing to finance the purchase. He declined to discuss the customer specifically and added he "didn't think it would happen again."
"We got our money and it's no risk to us," said Gentner. "We don't typically do financing. We don't like to do that. We've been very conservative."
Redback officials had announced Monday that Gentner would be retiring in early 2001 for "family medical reasons."
Following Gentner's comments Redback recovered some of its losses on the day, but the stock closed down 2.69 points at $70.06.
-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com