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Technology Stocks : Redback Networks, Inc. (RBAK)
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To: Peter V who wrote (87)6/18/1999 8:56:00 PM
From: Tom Hua   of 1956
 
Peter, here are some of the facts regarding this company.

1. About 130 employees, very small for a hardware company.

2. Reliance on few customers for sales. UUNET accounts for 43% of revenue last Q. When Sprint changed its buying pattern with CIEN, stock tumbled 90% (from $90 to $9) in a matter of months.

3. Worse yet, RBAK has no contracts or agreements with any customers.

4. One pony company. Almost all of its revenue was derived from a single product, the SMS 1000.

5. Reliance on a single third party manufacturer (Electromax), and there's no written agreement with Electromax.

6. Facing intense competition from much bigger and dominant players including Nortel, Lucent/Ascend, and Alcatel.

We're in the honey moon period with the stock. Once it's over watch out.

Regards,

Tom
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