Robert DeFrancesco s

TechStockProspector.com
June 16, 2011

Acme Packet (APKT) Gets Cheaper, Down 28% From High

-----------------------------------------------------------------------------------------------------Tech-Stock Prospector is now available in the Amazon.com Kindle Store in the Business & Investing section of the online magazine stand. Here s the Kindle link: http://www.amzn.com/B004T6Z0ME -----------------------------------------------------------------------------------------------------While Acme Packet (APKT, $62.80) shares are still pricey, they re no longer priced for perfection. The stock has been hit fairly hard during this recent correction, falling as much as 28% from the 52-week high of $84.50 (set April 29) at today s intraday low of $60.60. The forward P/E, based on the 2011 consensus EPS estimate of $1.16, now stands at 54, vs. the expected growth rate of 45%. At the peak, Acme Packet shares sported a forward P/E of 77. On the 2012 consensus estimate of $1.50, the P/E comes down to 42. But per-share estimates are still all over the place for next year, with the high estimate all the way up at $1.80. Acme Packet reported Q1 EPS of 27 cents, two cents above the consensus, on revenue of $74 million (+44.9% year over year), vs. the consensus of $71.3 million. One of the most impressive metrics was that the company had a record quarter despite that fact that its largest customer Verizon accounted for less than 20% of total revenue, vs. 35% in Q4. Total revenue still managed to rise 5% sequentially, which indicates a much improved customer profile with less reliance on one carrier. In fact, nine direct customers had revenue of more than $1 million each, accounting for 72% of direct revenue, which itself represents 51% of total revenue. Gross margin fell 100 basis points sequentially to 84%, while operating margin rose 100 basis points sequentially to 40%. International revenue account for 40% of total revenue, up from 35% in Q4. Acme Packet ended the quarter with $298 million in cash & investments, up from $276 million at the end of December. The company now sees revenue growth of 35% for the year, up from its previous forecast of 30%, but in line with the 2011 consensus estimate. Per-share earnings are expected to come in at $1.10 to $1.15 (previous guidance was $1.05), vs. the consensus (at the time) of $1.09. ------------------------------------------------------------------------------------------------------

Tech-Stock Prospector is now available in the Amazon.com Kindle Store in the Business & Investing section of the online magazine stand. Here s the Kindle link: http://www.amzn.com/B004T6Z0ME -----------------------------------------------------------------------------------------------------Tech-Stock Prospector Managing Editor Rob DeFrancesco has more than 20 years of experience covering the tech sector. He is a former senior writer with Louis Rukeyser s Wall Street. TechStockProspector.com, launched in 2003, is an investment-research service focused primarily on the networking, storage, security, wireless and software sectors. Annual subscription: $350. For more information or to place an order, call 800-392-0998.