Redback Networks

» see redbacknetworks.com as it lived, on the wayback machine

~ the goodbye ~

Redback Networks was founded in August 1996 by Gaurav Garg and Asher Waldfogel, joined by William M. Salkewicz, with seed money from Sequoia Capital, to solve a problem that had just become urgent. Internet service providers were acquiring subscribers faster than they could manage them, and somebody had to build the box that sat between a few hundred thousand customer connections and the provider's actual network, deciding who you were and what you had paid for. Redback called it the Subscriber Management System. It was the right product at exactly the right moment.

The prospectus went out on 18 May 1999: 2.5 million shares at $23, raising $57.5 million gross and $53.5 million net, listed on Nasdaq as RBAK, from an office on Moffett Park Drive in Sunnyvale. It closed its first day of trading up 266 percent. Through 2000 it reached $198. This was not a company with a subtle relationship to the bubble.

In October 2002 the same share was worth twenty-seven cents.

~ the chronicle ~

~ four point three billion for a prototype ~

In November 1999, six months after going public, Redback bought Siara Systems for $4.3 billion in stock. Siara's products were at the prototype stage. They had not shipped and had no customers, existing as engineering work and a plan, and Redback paid for them with paper that the market had decided was worth whatever the market said it was that week.

The Siara technology did become SmartEdge, the most durable thing Redback ever owned, so this was not simply money set on fire. But the arithmetic only ever worked in the currency it was paid in. Abatis Systems followed in August 2000, and a Hong Kong regional office opened that October.

~ chapter eleven, prepackaged ~

Redback tried to restructure out of court first, starting in July 2003. The plan was accepted by an overwhelming majority of the creditors and stockholders who bothered to vote, and then failed anyway because not enough of them voted to make a quorum. So on 3 November 2003 the company filed a voluntary prepackaged plan of reorganization under Chapter 11 instead, explicitly as a way of forcing through a deal most people had already agreed to.

Kevin DeNuccio, by then chief executive, put the purpose plainly: court approval would remove $467 million of existing debt and cut operating expenses by a third. The Delaware bankruptcy court confirmed the plan on 19 December 2003 and it took effect about ten days later. Redback came out the other side smaller and owned by its former bondholders.

~ what Ericsson bought ~

The subscriber management box is a category I only ever met from the wrong end. Every dial-up session I opened in the late 1990s at 33.6k, and every DSL login after TTNet gave me broadband around 2006, terminated on something in this class of equipment, which checked an account and then let me onto the internet. You never see it and you never choose it. The brand on the sheet metal is a decision your ISP made years before you signed up.

Ericsson signed the merger agreement on 19 December 2006 and put the offer out three days later at $25.00 a share in cash. The initial offering period closed at midnight New York time on 23 January 2007, with about 71.5 million shares tendered, over 90 percent of those outstanding. On 25 January, Maxwell Acquisition Corporation merged into Redback Networks, which survived as the legal shell. Nasdaq was notified the same week that the company no longer met the listing requirements. Form 15 went in the next day.

SmartEdge kept shipping under Ericsson for years afterwards, and used units still turn up on the secondary market with RBAK stamped on the datasheets. redback.com answers a connection and then sends nothing. www.redbacknetworks.com is a 114-byte file that forwards you to a parking page. A company valued at $4.3 billion for one unreleased product now costs whatever a lapsed domain costs.

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