VoIP Systems

Sonus: Party Like It's 2002

Softswitch firm Sonus Networks Inc. (Nasdaq: SONS) is talking up its relationship with Japanese carrier KDDI Corp. today, but this time it's a different story than what was announced in 2002. (See KDDI Uses Sonus Gear .)

This time, KDDI, Japan's second largest operator after NTT Group (NYSE: NTT), plans to have all its long-distance traffic running through Sonus media gateways and managed by the firm's softswitch technology by 2008. Financial details weren't revealed, though Sonus says it is a "multimillion-dollar contract" and that it's the "exclusive vendor."

Sonus also boasts this will be "the largest VOIP network in Japan." It is quite well placed to make such a claim, as it has existing deals with NTT and SoftBank Corp. subsidiaries SoftBank BB Corp. and Japan Telecom Co. Ltd. , giving Sonus local bragging rights. (See Softbank Buys Japan Telecom, Sonus Wins at Japan Telecom, and Sonus: We're Big in Japan.)

If it's going to the biggest, then the deal should be worth more than the engagement with Japan Telecom, which, according to estimates from Piper Jaffray & Co. analyst Troy Jensen was likely in the $10 million range. Not that some of Sonus's representatives want us to focus on such matters, though. (See The Sonus Short Leash and any other shaggy dog stories...)

The news from Japan helped the vendor's share price bump up by 17 cents, more than 3 percent, today to $5.44. But that rise could have as much to do with expectations surrounding the company's fourth-quarter results, which will be revealed after the markets close today.

Nothing is ever guaranteed when it comes to Sonus financial reporting, but with the company's CEO Hassan Ahmed set to ring the Nasdaq opening bell tomorrow morning, he must be confident he won't have to drown out the cat calls from jeering traders. (See Sonus Shares Latest Thrill , 'Good Grief!' Sonus Disappoints Again, and Sonus Misses the Mark.)

Analysts, on average, are expecting the company to report revenues of $50.1 million and earnings of $0.01 per share, but the estimates vary wildly. At the top end is Gina Sockolow at Buckingham Research Group, who estimates earnings of 4 cents from revenues of $61 million based on previous guidance and some recent announcements. And in a recent research note she suggests a sizeable deal with Verizon Communications Inc. (NYSE: VZ) could be in the cards. (See Sonus Lands T-Systems Deal and EarthLink Picks Sonus .)

Other analysts aren't as bullish. George Notter at Jefferies & Co. Inc. , for example, has ongoing concerns, reiterated in a number of research notes, about the severity of the "competitive landscape" -- he believes it's tough, and will get even tougher in the future.

Sonus hadn't responded to questions about the KDDI deal as this article was published. But the company will likely address it during its earnings call this afternoon.

— Ray Le Maistre, International News Editor, Light Reading

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