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VoIP Systems

Nokia Siemens' Lifeline for Newport

After years in the VOIP equipment wilderness, session border controller (SBC) vendor Newport Networks plc (London: NNG) has secured a business lifeline in the form of an OEM deal with a "world leading vendor of Next Generation Networks and solutions."

Newport says it can't name the OEM partner for reasons of "confidentiality," but Light Reading has been assured by knowledgeable sources that Nokia Networks is the company in question. (See Newport's NSN Hopes.)

Neither party would confirm the relationship.

News that Newport has the deal in the bag sent its stock up by an extraordinary 75 percent. However, that rise only took the vendor's share price up to 1.8 pence ($0.04) on the London Stock Exchange , valuing the company at about £6.6 million ($13.2 million).

When Newport first floated its shares in May 2004, they commanded 71 pence, and, as expectations grew of mass, worldwide VOIP equipment deployments, they topped 130 pence a few months later. (See Session Controller IPO Scores Success and Newport to Ship Session Controller .)

But Newport had built a platform that was much bigger than carriers needed at their IP network borders, and while it developed a smaller product that better suited market demand, Acme Packet Inc. (Nasdaq: APKT) and NexTone Communications Inc. emerged as the SBC sector's dominant forces. (See Newport Needs Another $27M, Acme Profits as Newport Shrinks, and NexTone Gets a Loan.)

That left Newport needing more money and a new strategy. (See Crunch Time for Newport, Signs of Life at Newport, and Newport Updates SBC.)

Now, though, it has a signed deal with Nokia Siemens Networks (NSN), which has the option to rebadged the British SBC vendor's boxes, and says it's about to announce a significant contract award.

Newport's statement to the London Stock Exchange today notes that the OEM deal is set to generate "substantial business," starting this year and ramping in 2009, but the vendor won't put a figure on what sort of revenues might be generated.

The company badly needs some income. In its most recently reported financial period, the first six months of 2007, Newport generated just £76,000 ($152,000) in revenues and posted a loss of £4 million ($8 million). (See Newport Networks Reports H1.)

Newport's CFO John Ackroyd says the company has enough cash to see it through the current business cycle and has no plans to seek further funding at this time. Newport's most recent funding was in August 2007, when it issued 200 million new shares -- including 81 million to the firm's founder, serial telecom entrepreneur Sir Terry Matthews -- to raise £5.65 million ($11.3 million) after expenses.

— Ray Le Maistre, International News Editor, Light Reading

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