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Technology Stocks : Redback Networks, Inc. (RBAK) -- Ignore unavailable to you. Want to Upgrade?

To: im a survivor who wrote (1874)	12/4/2002 9:49:09 AM
From: StormRider	Read Replies (1) \| Respond to of 1956

nice correction again. i bought more at 91 cents. here's an excellent article! cmpnetasia.com Rejuvenating Redback Clement Teo, 2-Dec-2002 There have been whispers that Redback Networks wouldn’t last the next few quarters. Hit by a slowdown in telecoms spending and the overall state of the economy, Redback’s stock had taken a battering in recent months. However, in defiance of its naysayers, the broadband equipment provider bit the bullet and initiated staff reduction and discontinued some product lines. Its persistence with clients also paid off—in September alone, Redback signed up Shanghai Telecom and Chunghwa Telecom on two different product lines. Shanghai Telecom selected the Redback SmartEdge 800 router to rollout MPLS-based VPN services throughout Shanghai’s broadband metro-politan area networks, while Chunghwa Telecom deployed the Redback SMS 10000 platform of subscriber management systems to enable its business customers to build IP VPNs using DSL technology. Kevin DeNuccio, president and CEO, Redback Networks, shares his thoughts on the company’s strategy. What’s your product roadmap as it relates to the core and edge of the network? We have a unique value proposition. We’re one of three IP centres (Cisco, Juniper, Redback) that built IP OSes from scratch, and we built them for the edge of the networks. In addition, we have a number one customer base—holding a better than 50% marketshare. We’re in the same layer of the network in the edge where all the spending is done, where operators are evolving their networks to grow their revenue streams. From a product strategy standpoint and roadmap, we want to create a platform that helps data connectivity, and also help operators add services to customers, be it in wireless, xDSL, cable, or T1 layers. All our focus now is on the new IP services on the edge. As we’re going through a slowdown, we’re cutting down on other products. For example, we completely got out of the low-end optical transport, which wasn’t brought to market, and also our mid-range SMS product. The new platform is being tested, and getting a lot of traction. It’s with 60 service providers globally, and with every RBOC and ILEC in the US. How does having Nokia’s investment help here? Nokia will take a 10% stake of unregistered common stock in Redback, with an option to purchase an additional amount to increase its ownership of Redback’s outstanding common stock to less than 20%. The investment also comes with a Nokia seat on the board of directors of Redback. They will also help with distribution and integrating sales force, in effect becoming one of our largest channels. Nokia and Redback will expand their existing commercial relationship to include global distribution of wireline intelligent edge and broadband access products. The technological collaboration will be rolled out in three phases: first phase is integrating both companies’ products to make them seamless; second phase is in the operations and network management protocol segments. We will synergise these divisions; lastly, we will look to launch new products from the collaboration. In Asia, as services get created, consumers want it delivered over any kind of medium. Hence Nokia, whose strength is in the wireless world, and Redback, whose strength is in broadband, will seek to create solutions to enable services that span both infrastructure. What do you make of the industry in 2003? The global industry in 2003 will be very different from 2002. There will still be a slow economy, still a lot of debt, and no change in capital expenditure and spending patterns of carriers. True health won’t return until 2004. This is a business-led recession, and while carriers will continue to rotate to IP-based spending, aggregate spending is flat. The most active location for us is in the Asia region—strong economies, with high broadband growth, shorter evaluation cycles, and high growth rates in terms of data. We just had the first and largest win in Chunghwa Telecom for our router product. Europe is holding fairly steady, but the US has completely shut down. This is forcing us to improve cost and seek revenue growth through cost-cuts. Cost will be cut across the board, and that means streamlining the company. We’ll try to preserve as many people as we can, but we’ll reduce five contract manufacturers to just one. I expect to breakeven around Q1’03. In 2003, there will be continued enhancements to platforms that we have. We have a small team of 15–20 engineers to create applications for the boxes that can be used in the networks.