Newport Needs More Cash
The session border controller (SBC) vendor has just £350,000 ($480,000) left in the bank, and just announced first half revenues of just £76,000 ($155,000), compared with £758,000 ($1.54 million) in the first six months of 2006. (See Newport Networks Reports H1.)
Now the company is hoping to sell (or "place") 200 million new shares at 3 pence each to raise new working capital of £6 million ($12.2 million), it announced in a filing to the London Stock Exchange .
Newport's share price was at 3.5 pence yesterday, giving the vendor a market value of £6.25 million ($12.7 million). That's a far cry from its IPO price of 71 pence and the stock heights it reached in the months after it joined the London market in May 2004. (See Session Controller IPO Scores Success.)
Despite early confidence, the company failed to land any major deals for its 1460 core IP interconnect platform, aimed at Tier 1 carriers, and had to return to its investors for more cash early in 2006 and add a smaller product to appeal to a wider range of potential customers and match its main SBC market rivals Acme Packet Inc. (Nasdaq: APKT) or NexTone Communications Inc. (See Newport Needs Another $27M and Newport Launches 310.)
Earlier this year the company looked on the brink of extinction as its cash reserves dwindled and key executives bailed. (See Crunch Time for Newport.)
But Newport is clinging on, and says it's "addressing global opportunities and has built a sales pipeline that the Directors are confident will lead to increasing revenues commencing in the second half of this year."
Its lifeline appears to be potential sales via other, bigger telecom equipment vendors. In its filing the company noted that it "now has four signed agreements with major NEVs [network equipment vendors] and is in advanced negotiations regarding an agreement with one of the world's largest NEVs that is also a market leader in IMS solutions."
Newport recently announced a partnership with UTStarcom Inc. (Nasdaq: UTSI) and a few small deals, including an engagement at Taiwan's incumbent operator Chunghwa Telecom Co. Ltd. (NYSE: CHT) (See Signs of Life at Newport.)
The company adds: "The Directors believe that, subject to the Placing, Newport is well placed to achieve significant sales of its carrier-scale products as tier-1 operators move to deployment of NGN infrastructures... With many major NEVs offering the products, the Company is now better positioned to address the business opportunities worldwide."
It may feel better positioned, but its prospects are likely slim, according to one VOIP sector analyst. "Newport has not been really visible on the competitive front recently. With some exception, most of the noise being made in the space these days is coming from Acme Packet or NexTone," says Heavy Reading Senior Analyst Joe McGarvey. (See and NexTone Chief: We're Not in Play.)
It's not known whether Newport Networks already has assurances from investors -- or maybe one investor, chairman Sir Terry Matthews -- that the new placement will be snapped up. Newport's CEO and CFO were unavailable for comment when Light Reading called on Tuesday.
— Ray Le Maistre, International News Editor, Light Reading