NetScout Pleases Investors, Telco Customers

| About: NetScout Systems, (NTCT)

by Ben Kolada

NetScout Systems (NASDAQ:NTCT) on Thursday found itself in the fortunate position of pleasing both investors and customers. The company reassured its investors by announcing better-than-expected revenue in its FY 2013 first quarter, and in a separate announcement, also reassured its telco customers with the tuck-in acquisition of certain of Accanto Systems' service assurance assets.

On the financial front, NetScout reported that revenue came in at the high end of its previously reported guidance. The company generated $76.4m in its FY 2013 first quarter, a 21% increase over the year-ago period and above the $74.7m that analysts had been expecting on average. Net income for the quarter grew 109%, to $5m. Shares of NetScout were up 12% in midday trading.

Somewhat overshadowed by NetScout's earnings call was the small tuck-in acquisition of certain of Accanto's service assurance assets. Accanto provides service assurance products that enable telcos to monitor and manage the delivery of voice services over converged telecom networks. NetScout is purchasing Helsinki-headquartered Accanto's Pantera hardware probes and middleware and session analysis applications assets, which are based in Modena, Italy.

Although the acquisition announcement was secondary to the earnings release, the deal is still welcome news to NetScout's telco customers. NetScout claims that the intent of the deal is to extend its own nGenius Service Assurance product's control plane and data plane monitoring capabilities. NetScout said in the press release announcing the transaction that Accanto's assets will bolster nGenius Service Assurance's support for NGN voice services, including IP multimedia subsystems, and add incremental support for legacy circuit-switched voice, including SIGTRAN and SS7.

The acquisition, which includes the assumption of approximately 35 Accanto employees, is expected to be EPS-neutral. Mooreland Partners advised Accanto on the sale, which is expected to close this month.