DJ Redback CFO: Street's '01 Earnings Views Too High
03 Apr 08:15
By Peter Loftus
Of DOW JONES NEWSWIRES
(This report was originally published late Monday.)
NEW YORK (Dow Jones)--Redback Networks Inc. (RBAK) Chief Financial Officer
Dennis Wolf said analysts' estimates of the company's 2001 earnings are too
high.
The San Jose, Calif., network equipment maker warned Monday that earnings and
revenue for the first quarter ended March 31 would be lower than expected,
citing delays in purchases by its telecommunications service provider
customers. The company also said it would cut its work force by 12%, or 150
employees.
Redback estimated it lost 15 cents a share in the first quarter, compared
with the Thomson Financial/First Call consensus of earnings of 4 cents a share.
Revenue should be $85.9 million, well below the First Call consensus of $132.4
million.
In a conference call, Wolf said it was too soon to provide specific guidance
for full-year 2001 results. But he was able to say that "current consensus
estimates for this year are too high."
Before Redback's warning Monday, the Thomson Financial/First Call consensus
estimate for 2001 was for earnings of 44 cents a share, excluding special
items, compared with last year's 4 cents a share.
Chief Executive Vivek Ragavan said the current downturn in the network
equipment sector would "continue into the foreseeable future." The first
quarter was "very back-end loaded," he said, and during the last two weeks
several key customers delayed purchases of Redback equipment, which is used on
high-speed, or broadband, networks.
"There is a general slowdown in broadband deployment across the board and
that is the reason for the deferrals" of orders by customers, Ragavan said.
Ragavan said Redback continues to receive orders from top customers, and
isn't losing customers to competitors. He believes the company is
well-positioned to begin growing again when the economy recovers.
Redback's warning was the latest sign of weakness in the network equipment
sector. 3Com Corp. (COMS) has been cutting and recently exited some product
lines in response to a downturn in its business. Cisco Systems Inc. (CSCO)
hasn't formally warned of weaker-than-expected results, but many analysts have
trimmed estimates and Cisco executives have made cautious statements about the
current quarter.
In 4 p.m. Nasdaq trading, Redback shares fell $1.38, or 11%, to $11.70, a
decline fueled by Morgan Stanley analyst Christopher Stix's prescient
prediction that the company would warn of an earnings shortfall. After-hours,
Redback fell to $10.13, according to Island ECN Inc.
-By Peter Loftus, Dow Jones Newswires; 201-938-5267;
peter.loftus@dowjones.com
(END) DOW JONES NEWS 04-03-01
08:15 AM |
