The Night Watch: Redback Falls on Warning; Rate Cut Doesn't Excite - TheStreet

Following a day where the

Federal Reserve

announced a much-anticipated decision to

cut interest rates by 25 basis points, the after-hours market showed little reaction, as light volume produced no major movement either way for the first half-hour followed by sporadic movement as investors reacted to individual news items. In the early going, prices were off 0.1% overall on volume of about 1.28 million shares on

Instinet

.

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Networker

Redback Networks

(RBAK)

warned on Wednesday that it would badly miss Wall Street's earnings expectations for the second quarter due to a continuing weakness in the global telecommunications market. The company said it expects a pro forma loss of between 27 cents and 32 cents a share on revenue of $55 million to $60 million. The Street was expecting a loss of 11 cents a share in the period, which is slightly below the 5 cents a share it lost in the year-ago period. Investors did not react kindly to the news as they sent shares immediately lower, falling $2.11, or 18.7%, to $9.20 on Instinet. Shares also fell 18.7% on

Island ECN

.

Shares of

Cisco

(CSCO) - Get Report

continued to slide in the after-hours, compounding a 9-cent, or 0.5% drop-off in the regular session. Shares were off 13 cents, or 0.7%, to $17.80 on Instinet. Yesterday

Nokia

announced a partnership with

Check Point Software Technologies

(CHKP) - Get Report

and has emerged as a competitor with Cisco in the network security appliances industry.

Fiber-optic supplier

Exfo Electro-Optical Engineering

(EXFO) - Get Report

beat the Street's earnings estimates for the fiscal third quarter and maintained its guidance for the rest of the year. On extremely light volume, shares got a big boost, rising $2.95, or 16.8%, to $20.49 on Instinet. Sales increased to $45.8 million in the third quarter from $19.4 million in the year-ago period. Earnings increased to $6.2 million, or 11 cents a share in the period, from $2.9 million, or 7 cents a share in the equivalent period last year. Analysts were expecting, on average, earnings of 10 cents a share.

Shares of

Honeywell International

(HON) - Get Report

got a boost from news that

General Electric

(GE) - Get Report

made a last-minute effort to win approval from the

European Union

for its proposed $42 billion takeover of Honeywell, according to published reports. Shares of Honeywell shot up $2.50, or 6.8%, to $39.50 on Instinet. Shares of GE lost 91 cents, or 1.9%, to $47.35 on Instinet.

Chipmaker

Altera

(ALTR) - Get Report

announced that it was cutting 152 jobs, or about 7% of its workforce and reiterated guidance that second-quarter sales will fall 25% sequentially from the first quarter. Shares gained $1.76, or 6.7%, to $27.90 on the news on Instinet and 6.2% on Island.

The usual tech companies also were moving in the after-hours. Share prices of

Microsoft

(MSFT) - Get Report

remained unchanged despite decent movement on Instinet.

JDS Uniphase

(JDSU)

fell 6 cents, or 0.05%, to $12.07 on Instinet.

Sun Microsystems

(SUNW) - Get Report

was up 5 cents, or 0.3%, to $15 on Instinet.

Intel

(INTC) - Get Report

was up 0.3%, while

Dell

(DELL) - Get Report

was down 0.1%.

After the Close Wednesday

Macromedia

(MACR)

said it expects a first-quarter loss of 15 to 20 cents a share citing a weak market for developing Web content. Wall Street analysts were expecting the company to post a profit of 13 cents a share.

Cabletron

(CS) - Get Report

reported 1Q EPS, excluding charges, that were in line with analysts' expectations at 8 cents a share, as compared to a loss of 8 cents a share in the year-ago quarter.

Radisys

(RSYS) - Get Report

said it expects a second-quarter loss in the vicinity of 8 to 10 cents a share, failing to meet analysts' forecasts of a loss of 5 cents a share. The company will take a one-time restructuring charge in the form of a write-down of excess and obsolete inventory. In addition, the company will trim its workforce by 45 employees, reduce the salaries of its executives, and close several of its plants.

Rent-Way

(RWAY)

announced that it suffered "extraordinary charges" as a result of an internal investigation of the company's accounting practices. The charges totaled $129 million for the last three years, well above previous estimates of $65 million and $75 million.

State Auto Financial

(STFC) - Get Report

warned that its 2Q EPS could be trimmed by as much as one-third due to severe weather conditions, which damaged homes, cars, and businesses in the Midwest and eastern United States. The company expects to report earnings between 10 and 12 cents a share. Analysts, on average, were expecting the company to earn between 32 cents and 38 cents a share.

Tomorrow's Economic Releases:

  • At 8:30 a.m., Initial Jobless Claims will be released by the Labor Department for the week ending June 23, giving economists a better look at the worsening employment picture. The number of people without jobs has been on the rise, with the previous week coming in with an additional 400,000 jobless claims. When looking at this weekly number, many note the moving average and overall trend, in this case upward, to see how the economy is doing. Often times, weekly numbers can be fluky.
  • At 2 p.m., the minutes of the last Federal Open Market Committee meeting, held on May 15, will be released. Fed-watchers like to pick apart the Fed's inner workings to see how internal biases have changed and the overall rationale behind the Fed's movement. It's a lagging bit of data that rarely moves markets, but certainly adds to the amount of fat to chew.
  • At 7 p.m., Federal Reserve chairman Alan Greenspan will alight the dais at the Economy Club of Chicago, giving a speech about the impact of energy on the economy. People will pay close attention to what Greenspan says about the inflationary aspect of rising energy prices in hopes to get a bead on his current line of economic thought.