Sonus Networks Inc. (Nasdaq: SONS) sure knows how to keep its investors on their toes. Its stock jumped 5 percent to $4.58 in pre-market trading this morning as, a few weeks later than originally planned, it finally released its fourth-quarter and full-year 2004 results, and promised great things for 2005 (see Sonus Reports Q4, Full Year Results and Sonus Misses the Mark).

That early share price surge didn't last long, though, as the softswitch vendor's early morning conference call failed to provide any clear visibility into its growth opportunities, much to the frustration of participating financial analysts.

As the firm's management waffled on about how great things are going to be, the share price slipped back towards yesterday's closing price, and by 11AM Eastern time it stood at $4.42, up just six cents.

So what's the deal? Well, Sonus is undoubtedly in a hot market, has a solid position in the VOIP infrastructure sector, and has been winning new business and forging new partnerships (see Marcatel Picks Sonus for VOIP, XO Leverages Sonus, Time Warner Talk Fuels Sonus, AOL Uses Sonus for VOIP, Sonus Unveils Partner in China, and Samsung Sings Sonus Song). As a result, it recorded annual 2004 revenues of $170.7 million (just about in line with analyst estimates), up 83 percent from 2003's $93.2 million. Net income for 2004 was $24.5 million, or 10 cents per share (again in line with expectations), compared with a 2003 net loss of $15.1 million.

All well and good.

It is also addressing one of its outstanding business issues -- its over-reliance on a small number of customers -- though it still has a way to go. Sonus says that in the fourth quarter of 2004, it had four 10 percent-plus customers -- IDT Corp. (NYSE: IDT), Level 3 Communications Inc. (Nasdaq: LVLT), Qwest Communications International Inc. (NYSE: Q), and Time Warner Telecom Inc. (Nasdaq: TWTC) – which, between them, delivered 52 percent of the quarter's $45.1 million in sales.

That's a lot, but the situation is improving. New CFO Ellen Richstone noted that the top five customers accounted for 58.2 percent of revenues in the fourth quarter, compared with 76 percent in the third quarter (see Sonus Appoints New CFO).

But Sonus has also had more than its share of accounting issues during the past year, which has made investors jittery, and which led to the firm's temporary delisting from Nasdaq. The company is still working to redress what CEO Hassan Ahmed calls "weaknesses in our financial controls" (see Nasdaq to Delist Sonus, SEC Steps Up Sonus Probe, and Sonus Drops a Bomb).

And while the firm's management is supremely confident of future growth, there's a distinct lack of evidence at the moment to back up the hyperbole.

For example, analysts on today's call were treated to the following soundbites:

But what does this all mean? Is Sonus hinting at a slice of the next-generation network action at BT Group plc (NYSE: BT; London: BTA), where its partnership with one of BT's best pals, Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), puts it in a prime position to land some new business (see HR Unties Sonus/Marconi Tie-Up and BT Has 21CN Shortlists)? Is it about to announce a major new deal with Cingular Wireless LLC?

Ahmed and COO Bert Notini could only talk about how revenues are set to increase as a result of this upturn in activity in the latter half of 2005 and into 2006. As for the impact of consolidation, they would only reiterate that they see "very promising opportunities" as a result of existing customers AT&T Corp. (NYSE: T) and AT&T Wireless being acquired (see SBC/AT&T: How Painful for Vendors? and Cingular Completes AT&T Deal).

Ahmed added that, while Sonus was not in the habit of talking about orders that hasn't yet delivered accountable revenues, "we're trying to provide a qualitative understanding about our business activities."

What both Ahmed and Notini reiterated time and time again, though, is the company is still pouring resources into sorting out its "reporting weaknesses" by implementing new reporting processes and hiring new staff, and the company has set itself up to win increasing volumes of business in the access and wireless network sectors, where Sonus sees the greatest opportunities for VOIP infrastructure demand. "Our future success depends on the decisions we make now," Ahmed said in the conference call.

Now the markets will have to wait and see how much quantitative information Sonus can provide in the coming months, whether it can live up to the now lofty expectations it has set, and whether the company has finally put its accounting house in order.

— Ray Le Maistre, International News Editor, Light Reading