SAN JOSE: The projections are preliminary and subject to change as final orders are processed through the end of the quarter. In addition, the estimated results do not yet include adjustments for conformity to GAAP, which are currently being reviewed. "I am disappointed that we did not reach our sales target this quarter," said Kevin DeNuccio, president and chief executive officer at Redback. "In addition to the increased industry caution and reduced capital expenditure trends, we were affected by an unusually weak summer quarter. Furthermore, order delays and lower revenue volumes for our SMS(TM) 10000 product, which currently represents 70 percent of total SMS sales, were caused in part by customer's anticipation of the next generation Redback SMS 10000 product which is expected to ship next quarter." "As we continue to gain traction in our SmartEdge 800 Router sales, and through our belief that SMS sales will return to levels attained in recent quarters, we remain committed to achieving our goal of being cash flow break-even by the first half of 2003. We expect this to occur through a combination of revenue growth, gross margin improvement, and further cost reductions," said DeNuccio. "Despite our revenue shortfall, we remain highly-customer focused on delivering and supporting key products for broadband networks."