Sandvine Swings to a ProfitSandvine Swings to a Profit

Sandvine Inc. wrapped up its fiscal year by reporting a profit, in addition to continued momentum in the wireless market and a new channel partner.

For its fourth quarter, which ended November 30, the deep packet inspection (DPI) gear vendor reported revenues of $17.1 million Canadian (US$16.8 million), up 85 percent from the previous year's fourth quarter.

Fourth quarter net income was approximately C$100,000, matching that of the year-ago quarter and landing on par with analysts' expectations. (See Sandvine Reports Q4.)

For the fiscal year, Sandvine reported net income of C$19.0 million (US$18.7 million), or C$0.14 per share, on sales of C$73.7 million (US$72.4 million). That compared with a loss of C$0.4 million on sales of C$31.7 million (US$31.1 million) in fiscal 2006.

Sandvine's growth is being driven by carriers wanting to view and manage the traffic passing over their networks. The company added 10 new customers in the fourth quarter, including three wireless customers.

Interest from wireless providers is accelerating due to the large number of subscribers now using data services, CEO Dave Caputo said on Sandvine's earnings call.

"The number is growing and the amount of bandwidth they're using is surprising everybody," Caputo said. "Historically, large wireless providers took the longest time to make these decisions, but now they're being more reactionary because the problem is looming large."

Sandvine hasn't named its recently won wireless customers. They included a North American WiMax provider and a pan-European service provider with 5 million wireless subscribers and 500,000 DSL subs. Today the company announced that a Tier 1 North American wireless carrier had also signed on in the fourth quarter. (See Sandvine Wins Wireless Deal, Sandvine Nabs Wireless Wins , and Sandvine Intros Platform.)

In coming years, wireless will be the fastest-growing segment of the DPI market, surpassing the wireline market by 2011, according to a recent Light Reading Insider report. (See DPI Market Set for Mobile Ramp and The Greening of DPI.)

In addition to new customers, Sandvine announced a new strategic partner. Huawei Technologies Co. Ltd. will join Alcatel-Lucent (NYSE: ALU) and Motorola Inc. (NYSE: MOT) as a reseller offering Sandvine products to its service provider customers.

Sandvine and Huawei had been working together for a year, but finally chose to announce the partnership after closing a deal with a Tier 1 wireless and DSL customer, Caputo said.

Sandvine shares were up C$0.18 (4.4%) to C$4.25 (US$4.15) in midday trading.

— Ryan Lawler, Reporter, Light Reading