MORE ON REDBACK:
<<<Redback Networks (RBAK) 11.31 +0.90: Earlier this week, rumors resurfaced that Juniper (JNPR) was interested in acquiring RBAK. If they are planning an acquisition, the stock just got a lot cheaper. After the close, Redback warned for Q2 as management now sees a loss ex-items of $0.27-$0.32 vs. consensus for a loss of $0.11. Top line is coming up way short at $55-$60 mln vs consensus of $88.9 mln. What might be to blame? Not surprisingly, a weak global telecom market. Unfortunately for Redback, the company has a lot of exposure to the weak carrier market. All optical is weak, but the service provider/carrier side of the business is much weaker than the enterprise side.....It was a pretty bearish conference call. Specifically, mgmt noted delayed orders from Williams, Genuity, SBC and Bell South. This should not come as a big surprise as Genuity earlier this month slashed its budget to $1.4 bln from $2.2 bln and mgmt said they see the cuts extending through 2004....A number of questions on the call arose about the company's cash position. Mgmt expects to end the quarter with around $300 mln in cash (roughly $2 per share). RBAK's cash burn rate of $70-$80 mln in the quarter raised some eyebrows, but the company expects this number to decline in Q3. Mgmt said they expect to be cash flow neutral within a couple of quarters, but not Q3. We hope so, or this stock is heading much lower. Bottom line: if you own any stocks with a decent amount of exposure to carriers, beware. Others with carrier exposure include CIEN, SCMR, CORV, NT, LU, and ONIS. -- Robert J. Reid, Briefing.com >>>
Namaste!
Jim |
