Redback Networks Rallies on Report of Quicker Acquisition

Redback Networks Inc. shares gained 11% on Thursday, rallying for the second day after an analyst said the networking equipment maker will complete its acquisition of Siara Systems Inc. earlier than expected.

Redback (ticker symbol: RBAK) soared $25.25 to $262.25 on Nasdaq after a 7% climb Wednesday and now is up 22-fold since the Sunnyvale, Calif.-based company first sold stock to the public in May.

Brean Murray & Co. analyst Gina Sockolow said Redback’s purchase of Siara will close soon after a shareholder meeting March 8.

With the merger, Redback--which is already profitable, unlike many young tech firms--can introduce Siara’s products as well. Siara, which is developing next-generation fiber-optic equipment that accelerates Internet traffic, landed its first contract late last year.

“We believe that Siara’s products continue on track and . . . will be well-received by Redback customers,” Sockolow said in a report.

Redback makes devices that allow telephone, cable and Internet service providers to rapidly deploy high-speed broadband access for customers.

The company may unveil a new version of its main product by the end of March, and the latest offering could be used in the biggest telecommunications networks, Sockolow said.

The firm is expected to earn about 34 cents a share this year.

Redback may also be getting a lift from Paul Johnson of Robertson Stephens, coauthor of “The Gorilla Game,” a 1998 book revered by some tech investors.

In the latest Smart Money magazine, Johnson calls Redback one of his top stock picks. Johnson, who is known for recommending networking king Cisco Systems Inc. (CSCO) at its 1990 initial public offering, also said he likes Cisco rival Juniper Networks Inc. (JNPR).

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Red Streak

Shares of Redback Networks have surged 2,180% since their May debut and 48% this year. Monthly closes and latest on Nasdaq:

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Thursday: $262.25, up $25.25

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Source: Bridge News