Redback Networks again reported impressive financial results in the second quarter, announcing its first partnership with an original equipment manufacturer in the process.

The edge router vendor's second-quarter net revenue was up 97% from a year earlier, and up 18% sequentially, to $68.2 million.

Redback has formed an OEM partnership with an Asian vendor that the company won't name until sometime in the second half of the year. Redback is working with the partner on a $10 million SmartEdge100 contract in Asia and expects to see the bulk of that revenue in the fourth quarter or in the first quarter of next year.

Redback reported a marked increase in revenue from Asia, which contributed 21% of its second-quarter revenue, but heavy price competition there drove its margins down slightly, from 61.4% to 61% (excluding one-time items). If China Netcom and its subsidiaries were counted as a single customer, it would now be Redback's third largest customer in terms of revenue--though still less than 10% of its overall revenue.

Strong orders in Asia also prompted Redback to raise its revenue expectations for the second half of the year.

Redback's CEO Kevin DeNuccio called Asia a very different marketplace than the rest of the world and identified Huawei Technologies as its biggest competitor there. "We have a more significant technology lead over [Huawei] than over the traditional guys we compete with, but they're very aggressive in their homeland in terms of pricing," DeNuccio said.

Redback's overall gross margins should hold their place, between 60% and 62%, for the rest of the year, DeNuccio said, optimistic that any pressure on margins from Asian competitors would be offset in other markets. "We can blend in the pressure of margins in China in the other [geographic] theaters to keep our blended margins in the range that they're in," he said.

The company also reiterated its confidence that BellSouth will become an even bigger customer after its pending merger with AT&T is completed. BellSouth was Redback's biggest customer in the second quarter, contributing more revenue than expected--something north of 10% of the total.

"We have had several meetings with AT&T and BellSouth and have confidence from both those management teams in what we're doing with BellSouth's network today and going forward after the merger completed," DeNuccio said. "I think that network will live on past the merger and be able to expand more than it would have at BellSouth alone."

Redback attributed much of its success in the quarter to sales of its newer SmartEdge gear to BellSouth and sales of its legacy SMS broadband edge gear to AT&T.

Its work supplying British Telecom's next-generation network may be a bit behind schedule, however, as BT is "trying to shut down their voice network more aggressively" than other carriers, DeNuccio said.

Redback added 17 new customers in the quarter, including three of the world's top 20 carriers. It now claims 11 out of that 20. In addition, Redback entered into new SmartEdge field trials in the quarter with other carriers in the top 20. And the top 20 has four requests for proposals outstanding, Redback said.

"Our [SmartEdge] win rate has been off the charts--almost bulletproof," DeNuccio said, taking a swipe at edge router market leaders Cisco Systems and Juniper Networks. "The opportunity to become the leading edge router in the market is clearly a realistic goal. With over $2 a share in cash and no debt, we have the solid balance sheet we've been working toward for rapid growth."

Redback hired 84 new people in the quarter, ending it with 639 employees. And it expects to continue hiring, the company said today.

The company expects to see normal seasonal softness in the third quarter and a strong fourth quarter.