Sonus Boosts Sales, Disses Rivals
MARCH 01, 2007
Sonus Networks Inc. (Nasdaq: SONS - message board) again reported only
partial quarterly results Wednesday because of an ongoing internal
stock options review, yet took pains to say its competitors are
"distracted by internal events."
The VOIP gear maker reported fourth-quarter revenues of $79 million
compared to $75 million in the third quarter. Thomson First Call
analysts had expected fourth-quarter revenues of $68.2 million.
Revenues for the full year fiscal 2006 were $279 million. Analysts had
expected $266.9 million.
Sonus cited strong sales in Europe and Japan as part of the reason for
its strong revenue numbers. Cingular Wireless LLC , Japanese carrier
KDDI Corp. , and Level 3 Communications Inc. (Nasdaq: LVLT - message
board) each contributed 10 percent or more of Sonus's fourth-quarter
revenues.
Of its bottom line earnings, Sonus says only that its fourth quarter
and full year 2006 net income "increased meaningfully" over the same
periods a year earlier. The company has filed only partial earnings
for the past three quarters because of its ongoing internal stock
option review.
"Really all parts of the story seem to be working," says Sanders
Morris Harris analyst Natarajan "Subu" Subrahmanyan. He believes Sonus
is selling increasing amounts of VOIP gear into trunking, access, and
wireless networks.
Despite all the positive signs, Sonus's stock dipped slightly, by 14
cents, or nearly 2 percent, to $7.55 in after-hours trading Wednesday.
Sonus says it expects to keep growing at least as fast as the VOIP
gear market. The company says it booked more than $100 million in
orders during the fourth quarter, and saw record orders for the whole
of 2006. The company believes those bookings should fuel a steady
first quarter and an even stronger second quarter. Analysts expect
first-quarter revenues to be $70.3 million. (See Sonus Touts Traffic
and VOIP/IMS Market Up 31%.)
Nobody was very surprised about the strong Sonus top line. The company
had already briefed Wall Street on its strong bookings in early
January, and saw its stock jump 6 percent. (See Sonus Leaps on Update.)
The price of the Sonus stock hovered around $4 and $5 for much of
2006. But the stock broke the $6 mark in the final two months of the
year and it has stayed there, bolstered by bullish VOIP market reports
and signs that Sonus is keeping pace with the sector's growth. (See
Sonus Boasts Share and Sonus Touts Growth.)
This was enough to encourage Sonus CEO, Hasan Ahmed, to take a verbal
swing at his rivals. "Our competitors are distracted by internal
events and are unable to deliver the scaleable solutions that the
market requires," he told analysts during the firm's earnings
conference call. He repeated the "distracted" theme no less than three
times during his comments.
Meanwhile, Ahmed says his company has remained focused on the VOIP
conversion business, and large operators have noticed that focus.
As for those key rivals, Sonus believes Lucent's team has been tied up
with the Alcatel merger, while Nortel Networks Ltd. (NYSE/Toronto: NT
- message board) has been busy with its efforts to redefine and
refocus its business, explains Subrahmanyan. (See Nortel Nears Filing
Deadline and AlcaLu Rules Out French Redundancies.)
Ahmed's aim is to continue capitalizing on those perceived
distractions and build a strong customer and technology base. That
strategy looks set to include at least one niche acquisition in the
near future, and an increasing focus on the requirements of wireless
carriers. (See Sonus May Eye Niche Acquisition, Sonus Unveils GSM
Strategy, and Sonus Claims Lead.)
— Mark Sullivan, Reporter, Light Reading |
