Acme Packet earnings slide 82%, but outlook helps boost share price

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Acme Packet (Nasdaq: APKT) plans to push hard into the enterprise and wireless space, which CEO Andy Ory on Wednesday described during a first-quarter earnings call as the "strongest drivers of future market growth."

Investors responded well to the Bedford, Mass.-based company's earnings news, pushing Acme Packet's share price up nearly 10 percent after hours, to $30.90, despite a slide of 82 percent in earnings for the first quarter.

During Acme Packet's conference call, Ory affirmed the company's 2012 forecasts of 10 percent revenue growth. He also outlined how Acme Packet plans to expand from its traditional wireline and cable service provider customer base into the enterprise and wireless markets "by investing in people, products, programs, and even via acquisition."

Ory said Acme's acquisition last week of German network-management software company IPTEGO--for $21 million--will help "expand and extend our session delivery network management capabilities."

"IPTEGO's Palladion software optimizes next-generation IP communication networks, enabling customers to rapidly troubleshoot customer experience issues down to the individual session or device level," he said. "The combination of our session delivery network solutions with IPTEGO's real-time intelligence engine will enable customers to move beyond individual element management and give them real-time network- wide visibility and analytics into their multi-vendor IP communication network."

And, while the North American service-provider market remains soft, there is an improving outlook, he said.

"We're seeing signs pointing to a possible improvement in the service provider spending environment in the back half of the year," Ory said, adding,"SIP trunking and enterprise conversion to IP communication services remains a critical investment area and the strongest growth driver in our business today."

And, he said, Acme Packet expects to see increased revenue as more service providers invest in VoLTE solutions in 2013.

According to a recent report from Infonetics, Acme Packet maintained its service-provider SBC market share at 57 percent in 2011. Ory said the company has also seen its enterprise market share expand to 34 percent. Acme added 70 new customers in the first quarter, bringing their customer roster to 1,688 customers in 108 countries; 24 were service providers and 46 were enterprises.

According to the numbers, higher opex and reduced product revenue in the first quarter combined to push earnings down 82 percent.

Total revenue for the first quarter of 2012 was $70.8 million, compared to $74 million in the first quarter of 2011. Analysts had forecasted revenue of $63.91 million.

Non-GAAP net income fell 37 percent for the quarter, to $12.2 million, or 17 cents per share, compared to $18.9 million, or 27 cents per share, in the first quarter of 2011.

For more:
- see this release

Special Report: Enterprise Communications earnings in the first quarter of 2012

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