Will Acme Packet Ever Deliver?

A trip down memory laneIt all started in October, when the Voice-over-Internet-Protocol specialist slashed its third quarter guidance, sparking a mean sell-off. CEO Andy Ory said it was due to a big order delay from major buyer AT&T , nevertheless he was confident it would on the whole be scored, reaffirming full-year guidance in the process. I had called the sell-off a case of market overreaction, since shifting an order from the third quarter to the fourth should have little impact on the long-term bigger picture, if one naively believes Ory's conviction.

The fourth quarter rose 18% to $83 million

Disappointment revisitedRevenue in the fourth quarter rose 18% to $83 million, with adjusted revenues per share coming out to $0.26, flat with the prior year. That means Acme Packet wasn't able to hit its already reduced revenue outlook.

For the full year, revenue rose by a third to $307.3 million, nevertheless profit came up short. Acme Packet pocketed $1.02 per share in adjusted revenues, telling a similar story as its reduced guidance. I'd always liked Acme Packet's position in providing the session-border controllers that make VoIP (Voice over Internet Protocol) happen, yet its recent track record of execution is nothing however disappointing.

The results look particularly bad when you consider that AT&T's failed takeover of T-Mobile was supposed to be freeing up its capital spending budget, to the joy of network-equipment providers. It's a little early to tell if Ma Bell's as a matter of fact been opening its wallet more afterwards its AT&T-Mo dreams were squashed, nevertheless if it is, those dollars don't seem to be coming to Acme Packet, because even Acme's guidance was soft.

The first half of 2012 to be much better

He as well added that he doesn't expect the first half of 2012 to be much better, since there is global precariousness around when voiceover LTE (Long Term Evolution, latest standard in the mobile network technology) will be deployed. He again expressed his confidence that Acme Packet will capitalize as LTE (Long Term Evolution, latest standard in the mobile network technology) networks begin to roll out all over the world.

I agree with Ory that as telecommunications infrastructure migrates towards 4G LTE, Acme should see some opportunities. The problem is that Ory has lost some credibility by exuding confidence recently, claims followed by disappointing results. The possibility is there, however can Acme Packet deliver and execute?