Redback loses Verizon's edge router deal?

UBS Warburg has downgraded the stock of Redback Networks, citing "industry contacts" indicating that Redback has lost an edge router deal at Verizon.

UBS lowered the stock from Buy 2 to Neutral 2, according to a research report issued this week by the investment firm.

That report states that Redback is unlikely to win an edge router contract at Verizon even though the vendor has "the best technical solution." The business will instead go to Cisco as the second source supplier behind Juniper, the report states.

UBS says product portfolio breadth helped seal the deal for Juniper and Cisco.

"We believe both Juniper and Cisco offered aggressive pricing for the edge business, leveraging other parts of their portfolio - core routers, enterprise routers, and services," the report, written by Analyst Niko Theodosopoulos, states.

UBS initially estimated the total annual revenue opportunity of the RFP at US$125 million, but the firm now believes it could be half that.

Redback did not immediately respond to a request for comment.

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