VoIP Systems

Crunch Time for Newport

Session border controller (SBC) vendor Newport Networks plc (London: NNG) is facing a critical few months in its efforts to keep afloat in the VOIP equipment market, as it has yet to land a major deal and has lost some of its key senior executives recently.

Riding on a wave of interest in, and demand for, VOIP systems that help to interconnect IP networks, whether carrier-to-carrier or carrier-to-enterprise, Newport staged a successful IPO on the London Stock Exchange in May 2004 while it was still developing the high-end product it has been pitching to Tier 1 carriers ever since.

But industry sources say Newport overdeveloped its product. That's left the company on the sidelines while its rivals, Acme Packet Inc. (Nasdaq: APKT) and NexTone Communications Inc. , have snapped up business with smaller products more suited to carriers' technical requirements and budgets. (See Report: Session Controllers in Demand, Acme Profits as Newport Shrinks, and NexTone Touts Stellar 05.)

As Newport went longer and longer without winning a marquee account, investors deserted the stock, forcing the company to raise more cash to keep afloat. At its IPO, the shares were worth 71 pence, and in 2005 even reached 150 pence. Today Newport's stock closed trading at 3.625 pence, giving the vendor a market valuation of £6.25 million (US$12.3 million). (See Newport Needs Another $27M.)

Adding to the company's misery, a potential major contract it's been talking about for a year has failed to materialize. The carrier involved is believed to be Cable and Wireless plc (NYSE: CWP), which is still thought to be finalizing its SBC decisions.

The lack of business has seen a number of senior executives leave the company. Two senior sales and marketing staff have recently joined VOIP centrex vendor BroadSoft Inc. , while CTO Alan Nunn, who joined last year from BT Group plc (NYSE: BT; London: BTA), has now rejoined the U.K. incumbent carrier. (See Newport Snares 21CN Exec.)

Newport's CFO, John Ackroyd, says the company has about 60 staff and about £3 million to £4 million ($5.9 million to $7.8 million) in the bank. He wouldn't comment on the status of any ongoing customer negotiations, or confirm that C&W is the long-hoped-for customer.

He says Newport is due to announce its 2006 results in early March and has no plans to raise further funding.

Newport won't comment on speculation that an acquisition offer arrived in the second half of 2006. According to talk in the VOIP market, the deal was scuppered by Newport's chairman, Sir Terry Matthews, who reportedly thought the price offered was too low.

— Ray Le Maistre, International News Editor, Light Reading

turing 12/5/2012 | 3:15:35 PM
re: Crunch Time for Newport Why would they keep the doors open and the heater running? As a public company, don't they have a fiduciary responsibility to get the most for their shareholders, and wouldn't that mean selling off the assets and giving back the cash before there is none left?

And Matthews says the offer was not high enough??? What was it? 1 pound? Look at Netrake, Sir Matthews. They got bought for chump change and they at least had customers. If you don't have customers or revenue then you're only selling technology, and by the looks of it that technology could not beat out the market leaders, even in your home turf. So that means any acquirer will have to spend even more to try to improve it, if they're lucky.

It's time to cut your losses.
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