To paraphrase point-man and CEO Andrew Ory about the new
It improves our capabilities to meet the needs of our
customers in three areas: for high-capacity network
interconnect between service providers, for large-scale
subscriber access environment, such as VoLTE, and for
large-scale contact center and enterprises.
When we break down the numbers geographically, 49% of revenues
come from the United States and Canada, with 51% from the rest of
the world. That 51% of sales also includes the Asia/Pacific region
plus South America. So just because Europe is alive and kicking, it
doesn't necessarily translate into a banner quarter. For instance,
during the third quarter, sales were split 27% to enterprises and
73% to service carriers. Just doing back of the envelope
calculations of the revenue breakdown, you can infer it was a tough
three months for Acme Packet.
The Q3 bottom line
The reason I like Acme Packet as an investment is that it is
replacing outmoded telecommunications systems. Not necessarily
annihilating legacy infrastructure, but slowly making the change to
LTE (long term evolution) networks.
As Senior Vice President James Hourihan stated:
There's no doubt that all service providers' mobile
subscribers, at some point in time, will move on to LTE
networks. Why? Because they are going to go out of business
trying to run 2 or 3 mobile networks. They need to re-farm
spectrum. So it's not a question of effort, it's only a
question of when.
The when is a big question, especially since the company is
betting the farm on LTE, or more specifically, VoLTE. Mr. Ory
agrees with industry analysts that 2014 is when you are going to
see subscriber growth rates accelerate. Because the implementation
of this technology is time consuming, purchase-based opportunities
ought to materialize in 2013. Next year it will probably be back on
track a nd get back to the positive side of the ledger.
Here are some bullet points provided by company executives from
the Q&A session that shed some light on Acme's relationship
From an LTE purchase point of view, or a VoLTE
purchase point of view, there are very, very few
carriers in the world that are actually doing this
for now.And one example would be MetroPCS (
).And they purchased for several quarters, before
they finally had the infrastructure ready to start
rolling out that kind of service.
I don't know whether it's the top 25, the top 50
or the top 100, but these are the service providers
that will dominate the spending environment and the
subscriber management, of services over the next 5 to
10 years.And o ur goal is to win as many of those
providers as we can, to diversify away from the
reliance on 1 or 2, or even a region.
When people think of VoLTE, and our role in
VoLTE, we don't make the application servers. What we
do is we secure the application servers and we
extendits reach to every single access network, and
we provide security at the access network as well as
at the peering network.
Our strategy is very simple, which is to provide
the most comprehensive solution and provide the
greatest capacity to meetits needs most cost
effectively. So oftentimes, when we end up competing,
why we win isn't because our element is better than
someone else's element. It's usually because our
approach is that of a disruptor.
As a countermeasure to the dwindling stock price, Acme Packet
repurchased 1.6 million shares for approximately $29 million in Q3.
This computes to an average of $18/share. Right about where it now
trades. In my personal account, I've been dollar cost averaging
shares for six months now, with my cost basis at $22/share. I'm
underwater, but my original premise was that I'd double or triple
my money in 3-5 years, and I believe I will still do so. 4G LTE is
not going to go away, and Acme Packet has the end-to-end technology
to make it happen in a secure fashion.
I am long [[APKT]]. I wrote this article myself, and it expresses
my own opinions. I am not receiving compensation for it. I have no
business relationship with any company whose stock is mentioned in
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