rbak: Is Redback the next Cisco kid? (langer aber interessanter Artikel) - 500 Beiträge pro Seite

[sovantis]

Is Redback the next Cisco kid?
By R. Scott Raynovich

Redherring.com, August 25, 1999

It`s more elusive than the giant squid. But it`s a trophy that every financial analyst, venture capitalist, and individual investor dreams about finding: the next Cisco Systems (Nasdaq: CSCO).

For years we`ve heard bout "the next Cisco," in reference to the company whose stock turned $100 invested in 1990 into over $40,000 in 1999. At one time Ascend Communications was emerging as Cisco`s heir, but that prospect fizzled when the company was sold off to Cisco competitor Lucent Technologies (NYSE: LU) for the paltry amount of $20 billion (Cisco has a market capitalization of roughly $210 billion). Last year it was fashionable to compare Juniper Networks (Nasdaq: JNPR) to the networking giant. But now, Redback Networks (Nasdaq: RBAK) is the new "next Cisco," even though the company is only three months beyond its IPO.

In trading on Tuesday, Redback Networks tacked on another $9.38 (7.41 percent) to close at $135.88. That comes on the heels of a 10 percent rise on Monday, adding up to more than a 50 percent rise over the past two weeks. After being adjusted for a recent 2-for-1 split, Redback shares have risen nearly fourteen-fold since its May IPO.

That`s not a bad run for Redback, but it should be noted that the company has benefited from a wider updraft that has carried all of the next-generation networking companies into nosebleed territory. For example, Copper Mountain Networks (Nasdaq: CMTN) today continued to add to gains, adding 75 cents on Tuesday to close at $121.75; and Juniper Networks, which fell $5.69 on Tuesday (2.51 percent) to $221.31, has risen seven-fold since its June IPO offer price of $34 a share.

All of these stocks certainly give valuation skeptics plenty of ammunition. For example, Juniper most recently reported revenues of $17.6 million for the three months ended June 30, while sporting a market valuation of roughly $10 billion. Redback, on the other hand, is even smaller than Juniper. It reported revenues of $11.1 million for the quarter ended June 30, with a net loss of $2.1 million, and at the close Tuesday had a market capitalization of $5.5 billion.

So who`s behind the hype? A number of analysts who cover Redback and other networking stocks, including Paul Johnson of BancBoston Robertson Stephens and Conrad Leifur of U.S. Bancorp Piper Jaffray, were on vacation and were unavailable for comment. Mr. Leifur, however, was one of a number of analysts who were mesmerized by Redback`s vice president of marketing, Larry Blair, at Piper Jaffray`s telecommunications conference two weeks ago. During that week, Redback was trading in the $80s; the conference seemed to be a launching point for Redback`s rise into the $100s.

BETTER YOU BET
Gina Sockolow, analyst with the investment banking firm Brean Murray in New York, reiterated a Strong Buy on Redback shares on Tuesday and raised her price target on the stock to $183, based on revised valuation models.

How much does Ms. Sockolow love this stock? She was originally tempted to set a $300 pre-split price target for the stock, but she says she knocked her numbers down because people might have thought she was "out of her beans," she says. She believes she`s come up with a model that supports this sky-high valuation, and that model involves historical references to -- you guessed it -- Cisco Systems.

"Redback is at twice the valuation that Cisco went public at," says Ms. Sockolow. When you consider that Cisco went public back in 1990, Redback`s current valuation doesn`t seem too high. "Things are different now," she says. "People know what this stuff is, and what the Internet is, and the markets have grown." She also believes the small float -- with just 5.0 million shares available to be traded -- is contributing to Redback`s volatility.

Ms. Sockolow sees Redback growing at a 65 percent annual clip. If you take the 65 percent figure and "discount" that to a 40-to-1 price-to-sales ratio, you come up with an eye-bulging target somewhere in the vicinity of $400 per share. Ms. Sockolow calculated that target before the 2-for-1 split of the stock on August 5. She says that because that figure made her a bit uncomfortable, she knocked it down. Since then, however, she`s done some more massaging of the numbers and concluded that her first estimate was accurate.

"That`s conservative," she says. "The cable ISP market is just opening up the same way that the DSL market opened up."

MORE THAN A FEELING
Another factor contributing to the experts` love of the Redback is its market positioning. Redback`s switching equipment sits smack in the center of a convergence of various broadband technologies. In addition, the company has few competitors in its specific niche, which involves aggregating traffic coming from DSL, coaxial cable, optic fiber, and wireless sources. Richard Gilbert, the CEO of Copper Mountain, visited the Redherring.com offices on Monday; he said that his company is not competing with Redback.

Incidentally, none of these high-flying networking stocks competes directly in the same market. Juniper, for example, focuses exclusively on high-end routing, which is a different market segment altogether -- though nobody ever knows when networking companies are going to encroach on each others` turf.

The primary question, however, is whether Redback has the tools to grow beyond its niche and into new markets, as Cisco Systems did throughout the 1990s. To become the next Cisco, networking companies have to invade and conquer other markets.

This is where non-financial factors, such as the quality and attitude of the leadership, come into play. Ms. Sockolow believes that this "psychological" factor has made her the ultimate believer in Redback.

"John Morgridge [Cisco`s chairman and former CEO] lives inside of Dennis Barsema`s [president and CEO of Redback] brain," she says. She believes that Mr. Barsema, who was the senior vice president and general manager at Centigram (Nasdaq: CGRM) and also served in executive positions at SoftSwitch, Primary Access, and AT&T Paradyne, has the customer focus that is necessary to win other markets.

But valuing a company with such long-range vision has its pitfalls. What if, for example, Mr. Barsema leaves?

UNDER PRESSURE
The high valuations attached to this new crop of startups is putting more pressure on them to grow as fast as possible, and it`s not clear that their individual markets can support such growth.

Even Copper Mountain`s CEO, Mr. Gilbert, said the valuations sometimes make him nervous. "The real challenge is for these companies to grow into these valuations," he said.

Of course, Mr. Gilbert didn`t place his company in the same category. He believes that Copper Mountain -- because it is the only one of these new public networking companies to be profitable -- falls into a class by itself.

[sovantis]

habe noch einen netten artikel aus dem RAGING BULL BOARD


THIS IS WHY RBAK IS DEFYING THE
by: jkspiriting 6/2/00 3:11 am
Msg: 10549 of 10643

RBAK IN $23,000,000,000 BILLION DOLLAR MARKET WITH NEW TECHNOLOGY=> IN FY 2001 $$$!!!$$$

THIS IS WHY RBAK IS DEFYING THE MARKET, shooting up on up-nasdaq days, and still going up on down-nasdaq days...(Remember when AMD came out with the Athlon chip and consistently climbed from $40-$100 when the stock market was DROPPING this March & April? Expect RBAK to do the same with its new innovative technology...)

Aside from being helped by the market rally that anticipates a cooling economy, RBAK is DOMINANT WORLDWIDE (STOMPING ON COMPETITORS), ENHANCING ITS SUPERIORITY WITH SIARA, UNIQUELY PROFITABLE, AND WAAAY OVERSOLD (notice it`s decline started in reaction to its merger with SIARA, but now RBAK`s merger is paying off$$)...


What makes RBAK different from other premier stocks?

$$$ RBAK HAS CORNERED 71% OF THE INDUSTRY !!
RBAK is known as the WORLDWIDE LEADER in its industry. OUT OF 1452 SMS UNITS SHIPPED WORLDWIDE, RBAK SHIPPED 1029!!!$

AND NOW, ALWAYS AHEAD OF ITS COMPETITORS, RBAK HAS ENHANCED ITS SUPERIORITY AS THE FIRST COMPANY TO ENTER THE NEW ACCESS NETWORK & METRO OPTICAL MARKET (using IBM`s superior expertise & equipment), a market that is expected to reach...

$23 BILLION DOLLARS IN 2001 $!!$
(estimated by Lehman Brothers).$$$$$$$$$$$

IS RBAK UNDERVALUED IN A $23 BILLION DOLLAR MARKET? YOU BET!!


REMEMBER, IN 3Q (BEGINNING JULY), RBAK BEGINS SELLING THEIR NEW ACCESS NETWORK TECHNOLOGY TO ITS CONSUMERS $$!!

DOES THIS MAKE RBAK UNDERVALUED IN JUNE? YOU BET!!!


DON`T FORGET WHAT ADDS TO RBAK`S UNIQUENESS IS THAT NO MATTER WHICH BROADBAND TECHNOLOGY DOMINATES: DSL, WIRELESS, OPTICAL, CABLE-MODEM, DIAL-UP, RBAK IS THE DOMINANT SMS PROVIDER IN ALL THESE TECHNOLOGIES AND ALLOWS COMPANIES TO USE ONE OR ALL THESE TECHNOLOGIES AT THE SAME TIME!!!$$$


WHAT MAKES RBAK DIFFERENT FROM OTHER WORLDWIDE DOMINANT COMPANIES LIKE CSCO, QCOM, INTC, LU?

RBAK IS NOT A MATURE COMPANY WITH ONLY 15% GROWTH, IT IS YOUNG, WITH >420% REVUNUE GROWTH!!$$ THESE STOCKS TEND TO BE MUCH HIGHER. AND THEY HAVE LESS SHARES IN THE MARKET, SO THEY ARE NOT AS HIGHLY VALUED AS OLDER COMPANIES THAT HAVE MORE SPLITS UNDER THEIR BELT... RBAK IS UNDERVALUED. AND BUYERS ARE WATCHING FOR DIPS.

THE MSN SITE INDICATED THAT RBAK`S PE ON FY(12/00)EPS ESTIMATE IS -843.8 (WAS -1130.9 yesterday).


Unlike some premier stocks, RBAK has consistent revenue and year-over-year revenue growth (>420%). This is why some premier stocks lose their gains, they have no money to show for themselves or they have sky-high debt, making them risky investments these days!!

And although RBAK claimed they were profitable in January (before proforma) they clearly expect to be PROFITABLE (popular among analysts these days..) IN 2001, from a `00 EPS of -.11 to an EPS of .35! 404% GROWTH RATE!

BUT remember, if you want RBAK at a good price, you obviously have to buy before the stock market`s rise this October thru January (when RBAK becomes profitable in its $23 billion dollar market) AND before the "summer rally," claimed by CNBC to have started already...

AND REMEMBER, RBAK ENDS THEIR 2Q THIS MONTH AND IS EXPECTED TO HAVE A RUN UP IN PRICE PRIOR TO THE 2Q REPORT...

WITH 2Q BUSINESS WITH HUGE AMERICAN COMPANIES, GTE, QUEST, HUGE EUROPE & GERMANY COMPANIES, GORILLA FRANCE TELECOM, AND PHILIPPINES` & CHINA`S LARGEST ISPs, EXPECT AN EARNINGS SURPRISE...

BUY RBAK SHARES NOW, OR IN THE MID-100s-200s THIS JULY? NOW SEEMS CHEAPER...

AND WITH THEIR NEW TECHNOLOGY, EXPECT AN IMPRESSIVE REVENUE INCREASE IN 3Q REPORT AND HUGE RUN-UP IN STOCK PRICE.

DO YOUR RESEARCH: READ OLDER ARTICLES ON YHOO AND ON RBAK`S HOMEPAGE. RBAK IS VERY UNIQUE...


...BUT THEN, SOMETIMES THE STOCK PRICE SIMPLY SEEMS SEEMS TO RUN UP ON NO NEWS, WHEN INSTITUTIONAL INVESTORS ARE ACTUALLY BUYING ON MARKET-MOVING NEWS BEFORE IT IS ANNOUNCED TO THE GENERAL PUBLIC...