VoIP Systems

Acme Profits as Newport Shrinks

The latest financial reports from rival session border controller vendors Acme Packet Inc. (Nasdaq: APKT) and Newport Networks plc (London: NNG) show how two companies competing head to head for carrier business can have radically different fortunes.

Acme piles up profits
Acme has been around since August 2000 and was identified in the early days of the session border controller (SBC) market as one of the players to watch. (See Where Is VOIP?)

Having remained independent while many rivals were snapped up by larger vendors, Acme built up a customer base of more than 300 service providers, filed for an IPO in June this year, and has since been updating the Securities and Exchange Commission (SEC) with its financial progress. (See Acme Packet Lines Up IPO.)

In an amendment to its S-1 dated September 7, Acme reports revenues of $38.1 million and net income of $11.25 million, about 30 percent of its revenues, in the first six months of this year. In the same period in 2005, Acme reported revenues of $16.7 million and a profit of $83,000.

Its revenues for the whole of 2005 were $36.1 million, which, according to figures from research house Infonetics Research Inc. , would give it a market share for 2005 of 42 percent. Infonetics predicts that the session controller market will grow from $86 million in 2005 to $613 million in 2009.

Acme plans to list on Nasdaq with the ticker APKT, but has not yet set a date or a prospective share price range.

It's not the only session controller vendor that has snapped up a lot of business, though. Another of the early movers, NexTone Communications Inc. , claims to have about 500 customers and recently shored up its finances with a loan the company says will be its last funding event. (See NexTone Gets a Loan.)

Most of the other main specialist players have been acquired during the past few years. (See AudioCodes Takes Netrake, Juniper to Acquire Kagoor, Juniper Kills Its Session Controllers, and Ditech's Itsy Bitsy Jasomi Deal.)

Then there's Newport Networks.

Newport still on hold
While the likes of Acme and Nextone developed a range of small to mid-sized products and then built up scale and functionality, Newport dived in at the top end, developing and launching a monster SBC designed to sit at the interconnect points of large carrier IP networks and handle large volumes of IP traffic.

It staged its IPO in London in May 2004, joining the market with a price per share of 71 pence, and then launched its 1460 SBC product, targeting Tier 1 operators, in July that year. (See Session Controller IPO Scores Success and Newport to Ship Session Controller .)

But the company built its product too big too early, and it became apparent that large carriers weren't taking the bait. Its share price slumped, funds were eaten up, and the company was forced to raise more money in January this year. (See Newport Needs Another $27M.)

Since then, the company has talked about an impending deal with a major carrier, but in its interim report for the first six months of 2006, issued this morning, chairman Sir Terry Matthews noted that "negotiations with a particular large service provider continue but we cannot be certain with respect to timing or whether we will be successful."

That wasn't the only bad news. The company has hardly any revenues, is losing nine times more than it's bringing in, and is cutting its headcount to survive.

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