SONS Message Board - Msg: 22939844

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Technology Stocks : SONS

SONS 7.830

+2.8%

Nov 28 4:00 PM EST

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From: Home-Run	10/24/2006 5:57:38 PM
	Read Replies (1) of 1575

The APKT IPO a few weeks ago provides a useful comp for SONS. It was a Goldman led deal that went very well, it was priced at $9 after the initial filing range was set at 6.50-7.50. The stock popped immediately and is trading at about $15.50. This values Acme Packet at about $900 market cap, $800 M enterprise value. By comparison Sonus has a $1,300 market cap and a $1B enterprise value. But Acme Packet had only $38M of revenue (up >100% year-year) in 1H06; Sonus had $124M (up 36%) -- >3 times greater. In 2005 Acme had revenue of 36M vs Sonus at 195M -- 5 times greater. Acme Packet was VERY profitable in 1H06; its operating margins were >29% because its gross margins were almost 80%. Margins like that are RARELY sustainable -- competitive pressures usually force prices down closer to costs. So some of the current profitability has to be discounted as "not sustainable." Yet the SONS is trading at a valuation of <4 times current year revenue while APKT -- a smaller company that is not positioned as well as Sonus strategically -- is trading at about 10x revenue. red ------------------------- from another board

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