Embattled Ixia Finds a Fan

Amid class action lawsuit threats, a delayed SEC filing, and an embarrassing CEO departure, at least one financial analyst is finding something to like about the future of test and measurement firm Ixia.

James Kisner, vice president of communications infrastructure equity research at Jefferies, reiterated his Buy rating on Ixia's stock. Kisner also says in a research note to investors that Ixia stands to benefit from increasing activity in the 40G/10G Layer 2-3 datacenter market, as well as LTE expansion projects, VoLTE launches, and small cell developments (See Ixia Monitors 100G, Ixia Validates LTE Core, and Ixia Tests Small Cells.)

Though Kisner made a downward adjustment to his fiscal year 2014 earnings per share estimate for Ixia from $1.05 to $1, he cites Ixia's stable relationship with customer AT&T Inc. and Ixia's cost-cutting efforts, such as office closures in Australia and India, as positives. He also says that doom-and-gloom forecasts surrounding major Ixia customer Cisco Systems Inc. "may be overdone," and that Cisco's Imsieme datacenter switch unit likely will continue to need Ixia's test capabilities, as will other vendors in the Layer 2-3 segment. (See Cisco Set for Sales Slump and AT&T Expects Leg-Up in 100G Deployment.)

Still, another dark cloud around Ixia has to do with the departure of former CEO Victor Alston after it was discovered he lied about his academic achievements. The scandal was a tough blow for a company already struggling financially, and it caused Ixia to delay its third-quarter 10Q filing with the SEC while the company investigated further. The issue also has inspired several class action lawsuit sharks to circle Ixia during the past two weeks, a period during which it also received a de-listing notice from Nasdaq. (See Ixia Chief Fails Veracity Test , Ixia's CEO Quits, and Ixia Issues Q2 Sales Warning.)

Yet, Kisner downplays the panic. He writes that "the company's auditors had to ensure that Alston's fraudulent behavior didn't extend into his business activity. Based on our conversations with the company, we'd be surprised if we didn't see the 10-Q filed in the next few weeks."

Ixia CFO Tom Miller has not currently replied to a request for comment.

— Dan O'Shea, Managing Editor, Light Reading

Vishnu Goel 1/13/2014 | 11:51:47 PM
Re: Ixia like T&M companies have several challenges in future! Many of the companies like you mention are facing several challenges at their hands.But Effective leadership team at the helm is the running theme.And most of it may be due to the constrained size of the Global T&M market available to them.Struggling for couple of Platform testers,which can be solid growth engine in the intermediate term is another one.All CEOs have a very short term focus as they need to please Wall Street mandarins as well.Vishnu Goel T&M +919810101238 
GmBroucek 1/10/2014 | 12:17:24 AM
Re: Ixia like T&M companies have several challenges in future! I agree I would like to know how other companies in the sector are positioned like jdsu after the recent pre announcements by others in that space, spirent and cyni ixia
MarkC73 12/29/2013 | 6:11:43 AM
Re: Ixia like T&M companies have several challenges in future! Are other companies int the same sector, say like Spirent, facing the same pressures?  And how about other Testing companies that make more of the field test equipment like JDSU and EXFO?  Though I guess, JDSU has other areas of businesses like optical manufacturing that it can leverage.
Vishnu Goel 12/28/2013 | 7:14:42 AM
Ixia like T&M companies have several challenges in future! Even though the Company may be looking good from some short term angle-operational efficiency etc- the real issue lies somewhere else.Companies addressing Conformance/Performance testing across the layers are not able to break through the revenue traction overall.Few years back they were planning to be a Billion Dollar Sales company.They dont have clear visible strategy on the Test Platform still.Vishnu Goel T&M +919810101238
DOShea 12/4/2013 | 4:33:53 PM
Re: NASDAQ deadline-CORRECTION Sorry, the deadline is actually Jan. 18, 2014, not Jan. 28.
DOShea 12/3/2013 | 8:08:17 PM
NASDAQ deadline Ixia has until Jan. 28, 2014 to file a plan to come back into complaince for its NASDAQ listing.
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