Redback looks to add partners, staff

Riding a continuing wave of success and heading toward profitability in the fourth quarter, Redback Networks is looking to hire more staff and forge new vendor partnerships, the company indicated in its third-quarter earnings conference Wednesday evening.

The edge router vendor reported a net loss of $8.4 million (or $0.15 per share) for the third quarter, down a third from a year earlier. Revenue was up 5% sequentially and 73% year-over-year, to $36.4 million. But that number would have been much higher had Redback not decided to defer $3 million from a new large European customer whose contract with Redback was “complex.”

About 45% of Redback’s quarterly revenue came from North America, about a third from Asia and the rest from Europe.

During the quarter, Redback won 18 new customers for its SmartEdge platform, the product which has now been chosen by 11 of the world’s top 20 DSL providers (including SBC and BellSouth) and which contributed 73% of Redback’s third-quarter revenue.

These new customers typically order SmartEdge chassis with few cards in them, intending to add cards over time. Redback expects to continue hiring additional staff to support the new customers, the company said Wednesday. It currently employs 505 people, up from 486 at the end of June.

The company is also focused on adding new partnerships with other vendors.

“We’re becoming a more and more attractive partner for any of the traditional telecom suppliers, whether they be in Asia or anywhere in the globe,” chief executive officer Kevin DeNuccio said on Wednesday’s conference call. “You’ll see expansion of our partnerships and channels to reach the broader part of the market. I think we can attack the top of the pyramid very well ourselves and scale to that challenge up against Cisco and Juniper and their partners. But I think there’s a growing opportunity, now that the platform’s gotten such broad success, to bring on new channels of distribution, and that’s definitely an area of focus you’re going to see from us as we go forward.”

Redback’s partners are growing in number, DeNuccio said, but none appear likely to deliver 10% or more of its sales, as does Alcatel. “I wouldn’t characterize any of [our current partners] as strategic,” he said. “But we’re definitely seeing more inclusion by other major players to bid our products along with theirs. We’re definitely expanding who we’re dealing with in the market in general. Right now I wouldn’t forecast announcing another major strategic partnership at this point.”