Growth Is Back for This Small Cap
Growing demand in Europe for 4G mobile phones and a rebounding US economy will be very encouraging news for this small but sturdy telecom, notes Rob DeFrancesco of Tech Stock Prospector.
I am sure the management team at Acme Packet (APKT) will be very happy to see 2012 come to an end. This has really been a lost year for the company, with revenue expected to be down more than 11%. Blame sharp spending pullbacks from two key customers—AT&T (T) and Verizon (VZ)—for the bulk of the poor performance.
On the latest earnings conference call, CEO Andy Ory said he is confident that Acme Packet’s financial results and market share will improve when North American Tier One service provider spending resumes. The recent CapEx news from AT&T was a positive sign that the dollars will begin flowing again in the coming year.
For 2013, analysts on average look for Acme Packet’s revenue to rebound nearly 10%. That level of growth isn’t going to win any awards, but it will show institutional investors that Acme Packet is back on the growth track. And it will help reestablish some management credibility.
Ory is an optimistic guy. There is nothing wrong with hoping spending levels will improve. But investors eventually tune out when management keeps promising a turnaround and the stock keeps falling.
One bright spot for Acme Packet has been the European service provider segment.