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Broadband equipment maker completes merger; splits stock

Redback Networks announces a 2-for-1 stock split, its second in nine months, and finalizes its acquisition of Siara Systems.

Redback Networks is rolling.

The high-speed networking equipment provider today announced a 2-for-1 stock split, its second in nine months, and finalized its acquisition of Siara Systems.

The moves provide further evidence of Redback's mounting momentum, which has propelled the company's stock price skyward. The company recently reported its first quarterly profit after only a year as a public company.

The networking equipment industry is exploding as communications carriers upgrade their networks to exploit the growth of the Internet and Net-related technologies. Dozens of new optical start-ups and high-speed equipment upstarts have cropped up, all scrambling to provide the necessary gear for communications service providers such as Qwest Communications International, Level 3 Communications and consumer Net access providers, among others.

Redback announced the deal for Siara, a maker of optical networking gear for metropolitan areas, in November of last year.

"As the demand for high-speed access services begins to emerge out of its earliest stages, one company stands out as a pure play, with nearly unequaled opportunities, Redback Networks," Lehman Brothers equity analyst Steven Levy said in a recent report.

Lehman recently raised its rating to "buy" and set a $325 year-end price target on Redback.

Redback executives said the move to acquire Siara significantly expands the market Redback can sell to.

"We are moving Redback from supplying equipment for the subscriber management system market, which is a $2 billion opportunity, to a company that now can give our customers--the carriers and service providers-a solution from (network) edge to edge," said Redback chief executive Dennis Barsema.

The company believes it has broadened its potential market to the tune of $23 billion, according to executives.

"Redback has said they want to be one of the equipment providers a service provider will go to," Kevin Mitchell, an analyst with market watcher Infonetics Research, said. "They don't want to be a one-product company."

Redback's board of directors approved the 2-for-1 split for shareholders of record on March 20, with shares beginning to trade on a split-adjusted basis on April 3. Stock in Redback has been on an upward climb since the company went public last summer. Redback already has split its shares once, also on a 2-for-1 basis.

Redback hopes it can extend its expertise in providing Net access companies with sophisticated equipment to manage their customer bases by providing similar intelligence to a larger market, encompassing optical networks for businesses.

"I think investors have voted very clearly in favor of this strategy," Barsema said.

News.com's Ben Heskett contributed to this report.