Acme Packet: Almost as Big as Vonage

Posted by: Olga Kharif on October 17, 2006

Acme Packet (APKT), a maker of equipment allowing for secure Internet Protocol (IP) calling and video sessions, just went public last week. Looking at what’s been happening with its shares (they are up 6% since the IPO), we can already see that Wall Street is treating the outfit better than Web-calling giant Vonage, whose shares tanked after it went public. Investors, apparently, already value Acme, a little-known company, at $1.13 billion — nearly as high as Vonage, with a $1.2 billion market cap. That’s amazing, considering that Vonage has spent hundreds of millions of dollars to build up its consumer brand through marketing.

In a way, that’s no surprise. As of the end of last year, Acme was at break even, while Vonage’s profitability is nowhere in sight. As VoIP expert Jon Arnold said in a recent blog entry, “Vonage’s revenues are 10-15 times that of Acme’s, but look who’s making money.” Equipment vendors are also better positioned to make money in this market than service providers like Vonage (VG), facing competition from cable companies and telcos. Still, I wonder if this is a sign that Vonage is undervalued at this point.

Bottom line: Acme’s successful offering may signal that the market is ready for more VoIP equipment IPOs.

Reader Comments

Joe

October 18, 2006 4:58 PM

Vonage and Acme are two completely different business. Its like comparing Lucent and Sprint's stock performance.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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