Redback blames attacks for latest warning

Troubled equipment provider Redback Networks today issued an earnings warning for its third quarter ending Sept. 30, citing order delays and cancellations the company attributes to uncertainty by customers in the aftermath of the Sept. 11 terrorist attacks.

Redback estimates revenue for the quarter will be between $35 million and $40 million—a decrease of more than 35% compared to the company’s second quarter, which some analysts described as disastrous.

“The economic effects of these [terrorist] events are aggravating an already weak telecommunications equipment market, causing the timing of a recovery to be difficult to predict,” said Kevin DeNuccio, Redback’s president and chief executive officer, in a prepared statement. “As a result, the Company will be taking near-term actions to significantly reduce its cost structure. These proposed actions will likely result in charges for excess inventory and commitments, goodwill and other asset impairment, and restructuring.”

Delayed orders also were the key component of Redback’s earnings warning for the second quarter. At that time, Chief Financial Officer Dennis Wolf said he believed the revenue shortfalls were the result of delayed orders, not lost business.

The earnings warning is just the latest bad news for Redback, which has seen significant turnover in its executive ranks during the past 18 months—DeNuccio last month was named as the company’s third CEO during this period.

Meanwhile, the company’s stock price has fallen precipitously. After trading at more than $169 per share less than a year ago, Redback’s stock was trading at $1.57 per share in mid-afternoon trading after losing more than 30% of its value during the day.

—Donny Jackson, news editor