Sonus Networks has enhanced its portfolio with the acquisition of SDN technology assets from Treq Labs for an initial sum of $10.1 million. The acquisition closed on January 2.
The Treq technology is applicable to service provider and enterprise networks, with Sonus Networks Inc. (Nasdaq: SONS) citing Asia-Pacific operator Pacnet (which is currently being acquired by Telstra) and financial services firm State Street as existing users. (See Telstra Snaps Up Pacnet for $697M.)
According to Sonus, Treq's SDN solution combines "programmatic network control with network state awareness and application policy to deliver real-time SLA (service level agreement) assurance." Sonus intends to offer the Treq software alongside its session border control (SBC) and policy management technology to deliver "real-time application layer network performance and analytics. Together with Treq, Sonus is creating a new architecture for service delivery," the company stated.
For more details on Treq's technology and the benefits Sonus believes it can deliver, see the full press release announcement, Sonus Buys Treq Assets, Updates on Q4.
If Sonus manages to grow its SDN sales in the coming years it will award "earn-out" stock payments to Treq Labs: about 6.6 million shares if SDN-related revenues reach $60 million in the three-year period 2015-2017 and up to 11 million shares if SDN sales hit $150 million during that period.
Sonus shares are currently valued at $3.92.
The vendor has also announced a reverse stock split on a basis of 1 share for every 5 current shares, effective January 30, a move that will reduce the number of shares from about 250 million to about 50 million.
It also stated that fourth-quarter revenues will come in at around $77 million, at the low end of its previously stated guidance. "Our guidance for the fourth quarter reflected the possibility of limited-to-no budget flush from our service provider customers… this proved to be the case," stated CFO Mark Greenquist in the vendor's official announcement, adding that adjusted earnings are set to be in line with guidance at $0.03 per share.
Sonus expects its revenues for 2015 to grow by 10% compared with the $296 million it is due to report for last year. More details will be provided during the company's next earnings conference call on February 18.
Why this matters
The race is on to offer network operators more flexible network management and operations capabilities. Sonus has already developed virtual versions of its existing SBC product line and will now be able to offer proven SDN tools that enable operators and enterprises to run programmable networks. With an initial cash outlay of just $10.1 million this looks like a sound strategic move by Sonus.
For more on this topic:
- OPNFV Alliance Adds New Members
- Sonus Claims Virtual SBC Bragging Rights
- Sonus Snaps Up Diameter Specialist
- Calltrade Carrier Services Deploys Sonus SBCs
- Who Does What: SDN Controllers
- SDN & NFV: No Going Back
- OSS Is Key to SDN, NFV Strategies
- OIF: SDN Lets Carriers Control App Behavior
— Ray Le Maistre, , Editor-in-Chief, Light Reading