Acterna Default Points to Testing Times

Acterna Corp. (OTCBB: ACTR) is the latest tester vendor to get pinched in the wedge of the telecom downturn.

This week, Acterna told the Securities and Exchange Commission (SEC) that it failed to make an interest payment of roughly $7 million on senior bank debt of about $680 million, which represents roughly 70 percent of Acterna's total indebtedness.

Acterna stopped the payment as part of ongoing talks with its bankers, says spokesman Jim Monroe. Possible outcomes include a filing for Chapter 11 bankruptcy protection. No timeframe or deadline has been established for the restructuring plan.

Acterna's been struggling for months to navigate through the bleak test and measurement market, ravaged by a lack of carrier spending. Its telecom segment, which accounted for 76 percent of revenues for the nine months ended December 31, 2002, has been hit hardest. For that timeframe, Acterna reported that revenues of $408.9 million represented a 42 percent decline from the same period in 2001.

The company's taken the usual measures: By the end of 2003, it will have laid off over 62 percent of the staff it had in 2001, leaving a total of 2,200 employees. Manufacturing sites have been consolidated. There's even been a CEO change, as longtime exec John Peeler took the helm from Ned Lautenbach in March.

Acterna's news this week is just the latest of a series of snippets that reflect turmoil and consolidation in the market for telecom test gear:

  • Agilent Technologies Inc. (NYSE: A), the "800-pound gorilla" of the communications test world with over 50 percent market share by most counts, reported a particularly dim quarter in February and has suffered ongoing layoffs (see Agilent Reports a Loss).
  • GN Nettest separated from its parent in January (see Nettest Leaves the Mother Ship), emerging in a management buyout. Future uncertain.
  • Spirent plc (NYSE: SPM; London: SPT) told the SEC in March that its Spirent Communications subsidiary operating profit fell 63 percent from 2001 to 2002.

Never robust, the segment has been forced into consolidation for years, and the latest dearth of spending has been particularly painful.

Still, the tester crowd are a tough bunch, veterans of dodging market punches. There's every evidence of continued commitment to innovating and bringing out new gear. Spirent, for instance, had this summary in its last SEC filing: "We have planned our business assuming the challenging conditions in the telecoms market will continue throughout 2003... As growth in traffic increases opportunities for Spirent, we remain committed to investing in our leading-edge products."

Vendors also don't seem to be missing any tradeshows or opportunities to boost new products and accounts (see Spirent Enhances Security Testing, Acterna Intros Ethernet Testers, Acterna Intros a Buncha Testers, Agilent Launches 3 Testers, and Alcatel Prefers Acterna ).

But the tester vendors are picking their spots carefully. Acterna's Monroe says the company's put high hopes in selling a combination of products and outsourcing hands-on testing for carriers (see Acterna Addresses Workflow). Talk of high-end gear, such as 40-Gbit/s testers, has died down.

Clearly, the test market's regrouping. It will be interesting to see what emerges as the smoke clears.

— Mary Jander, Senior Editor, Light Reading

silenceofthelambdas 12/5/2012 | 12:14:58 AM
re: Acterna Default Points to Testing Times I find this news particularly disappointing because our experience with Acterna's testers for DWDM and SONET has been very good. Basic rate tests work well, plus we can play with digital wrapping up to 10.709, which few testers do and do well. Their options to support GFP testing on the ONT-30/50 platforms looked promising too - provided the equipment vendors who were hot on GFP are still developing technology to carry it.
Of course liking the equipment doesn't mean business will be good. Still it would be nice to see good equipment being available as long as it's needed. It would also be comforting to know that there'll be tech support for the tester we spent $$$$$ on!
Good luck Acterna!

Disclaimer: I use Acterna testers but have no other interest in the company.
Physical_Layer 12/5/2012 | 12:14:54 AM
re: Acterna Default Points to Testing Times Silence - just curious if you've looked at some of the new EXFO stuff for Bit Error Rate testing. Any thoughts on it? Please post if you have any opinion. They're a fairly new player in protocol, but have been around in the optical layer for a long time.
silenceofthelambdas 12/5/2012 | 12:14:16 AM
re: Acterna Default Points to Testing Times Physical -
Though we've used EXFO optical test equipment (in IQ-200/500 series and handhelds) for years, I do not have any direct experience with their telecom/datacom protocol testers. At the time we were looking, EXFO didn't have anything that could handle digital wrappers, nor protocol testers that could also do decent jitter and wander measurements. We got these with Acterna. Just about every vendor offers BERT that's useful for link tests, but not many offer the options we were looking for.
We've done well with our EXFO modules - I'd think their new testers would be worth a look, particularly if you work with standard rate OC192-48-12-3 etc.
Not-being-very-helpful - SOL
mojorising 12/5/2012 | 12:13:49 AM
re: Acterna Default Points to Testing Times I think the EXFO analyzers are what they got from GNUBI. Agilent also has OTN testers, I think they were the first.
farfields 12/5/2012 | 12:06:39 AM
re: Acterna Default Points to Testing Times Well, as predicted Acterna announces its 'focussed business plan'.
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