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Technology Stocks : Redback Networks, Inc. (RBAK)

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To: Brasco One who wrote (1733)	10/11/2001 5:54:23 AM
From: StormRider	Read Replies (3) of 1956

cc notes posted on yahoo... new sales VP from CSCO. new head of manufacturing. new head of engineering. new sales structure, closer customer focus. more broadband demand due to 9/11. revenue market tripples next year to 2.7B. 85% of all cap-ex spenders are customers. 50% of sales came from outside of US. VZ and FTE were largest customers, 36% of revs. no more inventories. no more writeoffs. improved net margins in 2002 to 45%. base revenue is 37M (the absolute bottom). enough cash to last through downturn. new products = new revenue growth. 2.7B writeoff for Siara and Abatis new contract manufacturer now "build to order" model, no inventory buildups increased DSO (82 from 74 days) due to international sales 54M Arrow electronics lawsuit (old manufacturer) this is overinflated but already included in these forward numbers new employee options, vesting starts over again terminated excess facilities in silicon valley and Vancuver BC, included in losses til released can respond quicly to increased demand smartedge revenues decreased in Q3 (orders deferred) due to trials of new smartedge router chose not to take order from key customer (low bid), now renegotiating order for Q4 reduced 103 engineers, saves 10M/quarter headcount now low 800's from 1012 break even point now 70-75M/quarter R&D reduced to 22-23M/quarter operating expenses down 4M/quarter focus reduce cost and preserve cash focus increase revenues and market share going head to head with CSCO in aggregation router market, CSCO is sole player (????). conservative quidance going forward cash balance. revenues up from Q3 base of 37M (conservative) not including new sms 10000 and smartedge router sales. 2002 revenues comfortable with 240-280M. cash flow break even in later part of 02. router deployment is constant and ongoing. Q4 cash burn of 45-55M (mainly new inventory, 100% return on inventory) topped out now. standard gross margin 68% for Q3. Lehman's raw new yorker analyst asks if revenues could triple if executed as planned, professional and conservative answer was NO. no more back end quarters due to new "build to order" market. cheaper costs from new single contract manufacturer. broader international market at hand, 505 of Q3 revenues from international customers (mainly FTE). customers will migrate from SMS 1800 to 10000. SMS 10000 focuses on network to user vs network to network by CSCO & JNPR. software is second to none. cash balance at Q2 2002 expected to be 160-190M. Products: new aggregation router (smartedge router)presently in trials with 15 major global carriers (66% in the US) new SMS 10000 product which lowers carrier cost per subcriber, good reception by customers new 1.3 optical transport platform (OSMINE certified by June 02, 1.2 already certified) first unit shipped already after successful trial

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