Acme Packet cautiously optimistic for 2009

Amid reporting its fourth-quarter results — a slight bump from last quarter, down from a year ago — Acme Packet did something increasingly rare these days, offering earnings guidance for the rest of the year. And the news, with a dose of caution, wasn’t all bad.

The tone reflects Acme’s strong market position in the next-generation IP market, but it also shows that such deployments by service providers — despite dire news from the much larger Cisco Systems this week, which predicted a 15% to 20% revenue drop next quarter — aren’t necessarily falling off a cliff, either.

Acme reported fourth-quarter revenue of $30.6 million, an 8% increase from the third quarter. Year over year for the fourth quarter, revenue fell from $31.4 million to $30.6 million, and income fell from $5.2 million to $3.7 million. For the year, total revenue increased 3%, from $113.1 million in 2007 to $116.4 million in 2008. In a rare bit of guidance for this year, Acme said its outlook for 2009 calls for revenue to range between $120 million and $125 million.

Where’s the growth? IP-centric wireless and SIP trunking

Not blockbuster numbers, especially from a company that has grown as quickly as Acme has to date. The company’s session border controllers play a key role in service provider voice-over-IP and data-centric IP networks. In coming weeks, as mentioned on the company’s conference call, Acme is looking to move into new markets, notably wireless — supporting both long-term evolution (LTE) and WiMAX networks — and enterprise SIP trunking.

“Acme is steadily increasing its exposure to the mobile market, the only segment of communications with life in 2009, in our view,” wrote Eric Kainer, analyst for ThinkEquity, in an earnings note. “Also, its enterprise business looks to jump with demand for SIP trunks in Europe/Asia, now joining existing U.S. demand.”

Acme reported continued success among large service provider customers. It said it is now a vendor in 89 of the 100 largest global carriers and recently said it was involved in more than 100 next-generation IP multimedia subsystem (IMS) deployments. Its largest customer, Sprint, actually purchased more product in the fourth quarter ($4.9 million) than in any prior quarter, the company said.

Are service providers still spending? A qualified yes

The need for such service providers to continue their evolution to IP — and the relative strength of the largest service providers, at least compared to their peers in other industries — leads Acme to forecast 5% revenue growth in 2009, with Acme CEO Andy Ory adding that the company is “cautious in our optimism.”

Acme’s service provider customers “are [companies] that really have large installed customer bases,” Ory said in a conference call. “They’ve got breadth of resources. They're generally profitable. They've got large marketing engines, and we are optimistic that they will be in business two, three, four years from now, just providing voice services, not over TDM but IP.”

“We do have a general belief that we will experience growth in 2009,” he added. “It's unclear exactly how much it's going to be.”

More on Acme Packet:

NGN spending pulls back, though hopeful spots remain
Acme details IMS deployments
Acme aims for middle with new session border controller