Redback to fall short of estimates

(Telephony) Redback Networks added its name to the list of companies hurt by the economic downturn, announcing that it will miss earnings estimates and will lay off 12% of its workforce.

For the quarter ending March 31, Redback said it will report revenues of between $80 million and $90 million. On a pro forma basis, that amounts to a 15 cent loss per share. Consensus analyst estimates from Firstcall/Thompson Financial predicted the company would earn 4 cents per share for the quarter.

Much of the shortfall is attributable to deferred DS-3 revenues from two customers among Redback’s narrow customer base.

“Because our business comes from a base of major customers that order in large volume, the result is that ordering changes from even a few of these customers could have a significant impact on any quarter,” said Dennis Wolf, Redback’s chief financial officer.

In terms of layoffs, Vivek Gagavan, Redback’s president and CEO, said the company will cut 150 positions. Most research and development positions will not be affected.

The move is a far cry from earlier plans, which had the Redback adding 300 to 400 employees at this time. In preparation for these hires, the company had arranged for facilities for these employees. As a result, Redback will take a charge of about $23 million related to excess facilities, which it is currently attempting to lease. In addition, Redback will take a $4 million charge for employee-related termination.