Acme Packet - IPO On The Way

I've been expressing concern about how the Vonage IPO will impact the appetite for others who have been waiting for the right time to make their move. One could argue that Vonage's poor showing would spell doom and gloom, and scare all the bankers away from VoIP. Or one could say the bankers are smarter than you think, and are not letting one IPO based on a broken business model - albeit a BIG IPO for this space - cloud their judgment about smaller gems that are right at their feet.

Acme Packetis one such gem, and on Friday, they filed the news about their S-1 and plans to go public. The press release doesn't say much, but indicates that Goldman Sachs is the lead banker, with Credit Suisse and J.P. Morgan co-managing the offering.

I've followed Acme for quite a while, and when you talk about leaders within a vertical, you have to look at them for their space. The session border controller market is not as well defined as other nextgen network elements such as media gateways or media servers, but there's no doubt that Acme has had the most success in this space with Tier 1 carriers. Other session border controller vendors have strengths as well, but when it comes to landing the big ones, Acme has done the best job.

They're also in a great position because among all the main vendors in this space, I believe they've taken the least amount of venture funding - $31 million, only 2 rounds - and haven't taken any since September 2003. Wow! Compare that to Vonage and you tell me where you'd rather put your money. Slow and steady wins the race. So, their early backers - Menlo Ventures and Canaan Partners- will do quite well, and if the IPO flies, they'll be in great shape.

Personally, I think Acme will do just fine, and will show the market that the vendor space may be a better bet for IPO than the operator side. No need to comment further on Vonage, but Packet8 (another virtual operator) has been public for a long time, and hasn't done that well (down from about $2.50 to about $1.40 in the past 6 months).

Back to the session border space, it's worth noting that Newport Networks, who is gunning for the same class of carriers that Acme is serving, went public over a year ago on the LSE, and raised quite a bit of money - without revenues or any name customers to speak of. Their value has long since declined - and almost 10-fold (!!) in the past 12 months - for good reason, and you'd have to think that Acme has nowhere to go but up.

Looking ahead, this space has seen a few exits already, most notably Kagoor going to Juniper and Jasomi going to Ditech. Who's left? Well, NexTone and Netrake are the biggest and strongest pureplays in this space. Both are doing well for different reasons, but if I had to hedge my bets, I'd say NexTone is next up in this space to go public.

Technorati tags: Acme Packet, telecom IPO, Jon Arnold