Friday, October 13, 2006

Is Acme Packet Worth More than Vonage?

Very intriguing question, and it�s been on my mind since yesterday. From the looks of today�s IPO, it sure looks that way for Acme Packet. It�s a big day � and a good day � for anyone who has been in this space, or following it for the past few years. From what I�ve been told, this is the first IPO from a nextgen equipment vendor since 2000. Any guesses as to who that might have been? Sonus? AudioCodes? I�m not sure myself.

I�ve been close to Acme for some time, and have posted about them several times. One of their most public faces, Seamus Hourihan, is here at the ITExpo, and was on my FMC panel the other day, so we�ve had some time to reflect on Acme and what it means for the IP communications market.

So, with today�s opening, Acme�s market valuation is actually pretty darned close to Vonage � main difference being that Acme�s IPO price has held steady, whereas Vonage�s went south very quickly. Interestingly, Vonage�s IPO trading price isn�t far off from Acme�s, and you have to shake your head a bit and wonder � can these two companies really be comparable in value?

Of course, they�re in very different ends of the business, so it�s hard to compare. To me, the bottom line is you don�t have to be really big to have a viable business in the IP world. Vonage�s revenues are 10-15 times that of Acme�s, but look who�s making money, and look who�s been profitable for a while now, and look doesn�t have any debt, and look who�s coming out of their IPO with a dominant market position, at least among the Tier 1 carriers. Acme's opening price may be unsustainable, but it's a good story, and they've earned their stripes in my books.

Enough said, other than congrats to Acme � am sure they�re all smiles there today. And hopefully, the rest of the IP vendor space is breathing a little easier, especially the IPOs-in-waiting.

Quick coda - the Boston Globe was nice enough to cite me in their article on Acme today.

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