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To: patron_anejo_por_favor who wrote (112217)	7/11/2001 10:17:33 PM
From: Perspective	Read Replies (2) \| Respond to of 436258

Ah, and in that spirit, we have one of my favorite conflicts of interest. Just when you thought issuing stock to your customers in exchange for them purchasing your equipment was dead, SONS proves they can still play that tune. Oh yeah, and they fortuitously happen to upwardly revise revenue estimates, as they are trying to raise another $1B in cash: thestreet.com Sonus Networks (SONS:Nasdaq - news - commentary) rang the bell loud and clear Wednesday. The Westford, Mass.-based Internet phone-switch maker beat second-quarter earnings and revenue estimates and slightly raised guidance for the rest of the year. In doing so it essentially thumbed its nose at the spending slowdown that has battered other sellers of communications gear, such as Lucent (LU:NYSE - news - commentary) and Nortel (NT:NYSE - news - commentary). Sonus even sweetened the news after the market closed by announcing a contract with local phone service provider BellSouth (BLS:NYSE - news - commentary). Though no terms of the deal were announced, Sonus coincidentally issued BellSouth $10 million worth of convertible debt. Issuing equity-linked securities to customers can raise questions about conflicts of interest, calling into question the motives of buyer and seller. Still, it's not uncommon for start-up networking companies to exchange equity for some promise of minimum sales, and Sonus said it expects to book some sales from the deal by the end of the year. Investors greeted the good news, a rarity in tech circles lately, by pushing the stock up as much as 16% to $21.93 in after-hours trading on Island. Sonus shares rose 8% during regular trading to close at $18.93. Not including one-time charges, Sonus posted a second-quarter profit of a penny a share on revenue of $52.6 million. Analysts' consensus expectations were for a break-even quarter on $45.5 million in revenue, according to Thomson Financial/First Call. Including one-time charges, such as stock compensation and goodwill amortization, Sonus' net loss was $51.4 million, or 30 cents a share. Acknowledging the dismal climate for network equipment sales in the industry, Sonus' CEO Hassan Ahmed attempted to set his company apart from the pack, telling analysts on a conference call Wednesday: "Not all companies are the same." Backing up the talk with some numbers, Sonus raised, ever so slightly, financial targets. The company boosted its sales target to $190 million to $210 million, from the previous $180 million to $200 million. The revised earnings outlook calls for third-quarter profits of a penny and year-end profits of 3 cents to 4 cents. The analyst consensus for the year is 3 cents. Sonus' good news is well-timed: The company has filed with the Securities and Exchange Commission that it plans to raise as much as $1 billion in debt or equity at some point in the future. Consider the markets primed.