Indicating a strongly rebounding market for next-generation telecom gear, Acme Packet (APKT) shares continued their strong climb today after the company announced stellar earnings late last week.
Acme’s stock was up nearly 5 percent in late-day trading. Stock in the vendor of session border controllers (SBCs) has soared 135 percent since the start of the year.
Acme, which acquired Convergence Inc., a developer of SBC software, a year ago, has enjoyed strong growth as both enterprises and service providers, migrating to IP networks, invest in equipment to manage IP sessions across network borders. In the first quarter of 2010, the company’s revenue climbed 65 percent from the same period a year ago, while profits were up nearly 200 percent, at $8.3 million.
Sharply revising its forecast for 2010 upward, Acme Packet now says its revenue will reach between $204 million and $208 million for the full year. Previously it had estimated revenues of $182 million to $186 million.
The company is benefiting not only from the economic recovery, but also from pent-up demand among service-provider customers who have delayed their migration strategies from legacy networks to IP-based systems and are now moving forward rapidly to keep up with rivals and with technological advances. Acme says its customers include 90 of the top 100 service providers in the world.
Given Acme Packet’s runaway growth, 2010 looks like a promising year for its competitors, such as privately held GENBAND, as well.
Helping to fuel that growth are technological developments that heighten the importance of border control elements. The SBC function is being subsumed into larger networking platforms – a development advanced and welcomed by Cisco, which still has something like 65 percent market share for enterprise networking gear overall. While Cisco traditionally has been strong in the business-user market, Acme Packet makes close to 90 percent of its sales to service providers. Both companies are trying to encroach on the other’s turf, as Cisco moves into the carrier market while Acme strengthens itself on the enterprise side, particularly with large enterprises that have multiple remote sites and branch offices that now require SIP trunking and border-control functions of their own.
At the same time, SBCs are becoming important not just for bridging legacy, TDM networks and advanced IP systems, but becoming gateways between dissimilar IP networks. Carriers still require some point of demarcation between their networks and the enterprise LAN; but the distinction between SBCs and other types of gateways will fade over time.
