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Technology Stocks : Redback Networks, Inc. (RBAK)
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To: MarkR37 who wrote (1504)10/12/2000 3:15:10 AM
From: Bruce Brown  Read Replies (1) of 1956
 
Thanks, Mark. I was going to post them here as well once I got a good night's sleep.

Let me correct a couple of things since I was typing live during the event and didn't proof my notes.

• Quarter ended with $474 cash (down $18 million from previous Q)

Of course, that should read $474 Million

• $645 Million in revenue for next year is the "2001 guidance"

That's management's conservative guidance and works out to 20% sequential quarterly growth. Of course, Q1 to Q2 was 43% sequential and Q2 to Q3 was 65% sequential. Q4 should be at least $100 Million in revenue.

• Increasing demand for products warrant increased inventory to meet demand.
• Rapid acceptance from customers.
• Seeing robust demand on all fronts. Positive book to bill. Strong demand across the globe.
• Euro has not been a factor for Redback at all.

Management gave no indication that agrees with what some of the gloom and doom about capital spend slowing down has been in the media. Robust demand for all products on all fronts across the globe. Every large account they were up for in the bid against Cisco, Nortel and Unisphere - they won.

• Strong growth in DSL roll out throughout Asia and Europe. SMS 10000 product in great demand. As well, they see strong growth in both regions for fiber penetration and expect their SmartEdge product line to grow and coupled with the SMS line, Europe and Asia could be a total of 40 - 50% of revenues by year end 2001.

Important to note that the decline in gross margin was due to the SmartEdge product line introduction. The product had gross margin in the 40 - 50% range, but will ramp up beginning in Q2 of 2001 as the IP functionality package goes from beta to product inclusion. SmartEdge was $16 million of the $80 million for the quarter. SMS gross margin remains 70% and the SMS 10000 gross margin is in the 60's. By year end of 2001, the gross margin for the SmartEdge should carry the overall gross margin back up from the 60.2% range to a higher level.

The achieved profitability this quarter which was a full two quarters ahead of previous guidance. Of course, with two major acquisitions in the form of Siara and Abatis, it is understood what that does to the financials. The product growth and revenue contribution from both companies will be exciting to watch - at least for this investor.

The impression from the analysts was the usual 'great quarter' and management addressed the growth issues well saying they don't see slowing, but on the contrary - robust demand all over the globe for their products.

BB
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