Acme stirs fears of VoIP slowdown

A revenue shortfall announced last week from a leading vendor of voice-over-IP equipment is stoking concerns over whether macroeconomic conditions are leading to a slowdown in enterprise VoIP spending.

Late last week, Acme Packet announced its second-quarter revenue would miss projected estimates by 25%. The company blamed delays in the closing of some transactions as well as a surge of shipments in the quarter’s final days whose acceptance criteria precluded Acme from recognizing that revenue in the quarter. But some analysts fear it may be indicative of a larger trend.

“Given the [more than $8 million] shortfall, this implies that the first 10 - 11 weeks of the quarter were exceedingly weak,” Eric Kainer, an analyst for ThinkPanmure, wrote in a research note today. “Such imbalance gives us greater discomfort than a mere slip or push-out in orders…Since Acme is the most broadly-exposed global VoIP infrastructure provider, we are naturally concerned for the implications for all such vendors.”

In conversations at last month’s NXTcomm08 show, Kainer said, a handful of carriers and vendors reported a slight softening in demand for SIP trunking (session initiation protocol trunking -- using Internet connections to link enterprise PBX phone systems to the public switched telephone network), which drives carrier deployment of VoIP infrastructure.

“We believe that carrier demand continues at a high level but that spending is much more restrained,” Kainer wrote. “We are discouraged by what appears to be less robust demand than expected coming from enterprises, as typified by SIP trunk demand. We note that SIP trunk demand has directly driven carriers to build VoIP infrastructure. Moderation in demand for SIP trunks most likely will ultimately impact vendors and carriers across the industry.”

However, in an email to Telephony today, Kainer stressed that his information on this subject is so far only anecdotal and that the as-yet-unscheduled quarterly results from IP provider Cbeyond should provide a clearer picture. In February, Cbeyond warned of some softness in the small and medium business sector.

Analysts from both Dell’Oro and Infonetics Research said today that they had no hard indications of weakness in the VoIP trunking business.

“In general we have seen some delays in the deployment of IP phones as budgets get squeezed and North America continues to make up a smaller share of most vendors’ shipments (being offset by [Europe, the Middle East and Africa] and [Asia and the Pacific]),” said Alan Weckel, an analyst with Dell’Oro. “So potentially, just based on the weakness in North America, you could see less VoIP trunking (less systems shipping equals less North America trunking).”

Some VoIP suppliers have argued that budget shrinkage among enterprises could even help their sales, since VoIP offers cost reductions to customers. But some analysts are skeptical of that notion.

“Past slowdown and recessions showed that enterprises stop spending and stick to what they have to weather the storm,” said Stephane Teral, principal analyst at Infonetics Research. “You’re not going to play with new toys in a period of uncertainties.”