Sonus Boosts Sales, Disses Rivals
The VOIP gear maker reported fourth-quarter revenues of $79 million compared to $75 million in the third quarter. Thomson First Call analysts had expected fourth-quarter revenues of $68.2 million. Revenues for the full year fiscal 2006 were $279 million. Analysts had expected $266.9 million.
Sonus cited strong sales in Europe and Japan as part of the reason for its strong revenue numbers. Cingular Wireless , Japanese carrier KDDI Corp. , and Level 3 Communications Inc. (NYSE: LVLT) each contributed 10 percent or more of Sonus's fourth-quarter revenues.
Of its bottom-line earnings, Sonus says only that its fourth quarter and full year 2006 net income "increased meaningfully" over the same periods a year earlier. The company has filed only partial earnings for the past three quarters because of its ongoing internal stock option review.
"Really all parts of the story seem to be working," says Sanders Morris Harris analyst Natarajan "Subu" Subrahmanyan. He believes Sonus is selling increasing amounts of VOIP gear into trunking, access, and wireless networks.
Despite all the positive signs, Sonus's stock dipped slightly, by 14 cents, or nearly 2 percent, to $7.55 in after-hours trading Wednesday.
Sonus says it expects to keep growing at least as fast as the VOIP gear market. The company says it booked more than $100 million in orders during the fourth quarter and saw record orders for the whole of 2006. The company believes those bookings should fuel a steady first quarter and an even stronger second quarter. Analysts expect first-quarter revenues to be $70.3 million. (See Sonus Touts Traffic and VOIP/IMS Market Up 31%.)
Nobody was very surprised about the strong Sonus top line. The company had already briefed Wall Street on its strong bookings in early January when it saw its stock jump 6 percent. (See Sonus Leaps on Update.) The price of the Sonus stock hovered around $4 and $5 for much of 2006. But the stock broke the $6 mark in the final two months of the year, and it has stayed there, bolstered by bullish VOIP market reports and signs that Sonus is keeping pace with the sector's growth. (See Sonus Boasts Share and Sonus Touts Growth.)
This was enough to encourage Sonus CEO Hasan Ahmed to take a verbal swing at his rivals. "Our competitors are distracted by internal events and are unable to deliver the scaleable solutions that the market requires," he told analysts during the firm's earnings conference call. He repeated the "distracted" theme no less than three times during his comments.
Meanwhile, Ahmed says his company has remained focused on the VOIP conversion business, and large operators have noticed that focus.
As for those key rivals, Sonus believes Lucent's team has been tied up with the Alcatel merger, while Nortel Networks Ltd. has been busy with its efforts to redefine and refocus its business, explains Subrahmanyan. (See Nortel Nears Filing Deadline and AlcaLu Rules Out French Redundancies.)
Ahmed's aim is to continue capitalizing on those perceived distractions and build a strong customer and technology base. That strategy looks set to include at least one niche acquisition in the near future, and an increasing focus on the requirements of wireless carriers. (See Sonus May Eye Niche Acquisition, Sonus Unveils GSM Strategy, and Sonus Claims Lead.)
— Mark Sullivan, Reporter, Light Reading