Sonus Networks: New Products Accelerating Overall Growth - 60% Upside
Cobiaman • 10 Comments
Cobiaman • 10 Comments
Mon, Feb. 29, 1:01 PM
- BroadSoft's (BSFT +16.4%) Q4 beat has been accompanied by full-year guidance for revenue of $332M-$340M and EPS of $1.90-$2.10, favorable to a consensus of $325.1M and $1.93. Q1 guidance is for revenue of $70M-$74M and EPS of $0.20-$0.32 vs. a consensus of $68.7M and $0.24.
- Q4 billings (revenue + change in deferred revenue) totaled $91M, up 8% Y/Y. License software billings fell 2% to $36.4M. The deferred revenue balance stood at $111.1M (+9% Y/Y) at quarter's end.
- License revenue (drives future maintenance/services revenue) totaled $35.4M, subscription and maintenance support revenue $30.6M, and professional services/other revenue $23.6M. Non-GAAP operating expenses rose 22% Y/Y to $41M. BroadSoft ended 2015 with $248M in cash and $188M in convertible debt.
- Fellow VoIP/unified communications software provider Sonus (SONS +4%) is also having a good day.
- BroadSoft's Q4 results, earnings release
Tue, Feb. 16, 1:57 PM
- In addition to beating Q4 estimates, Sonus (SONS +24.5%) is guiding for Q1 revenue of $58M-$59M and EPS of -$0.03 to -$0.01, above a consensus of $56.4M and -$0.04.
- 2016 guidance is in-line: Revenue of $255M-$265M and EPS of $0.20-$0.27 vs.a consensus of $259.8M and $0.24.
- "[O]ur fourth quarter revenue results were driven by a high volume of orders from a diverse set of customers," says CEO Ray Dolan. He adds Sonus had no 10% customers in Q4, though one historical 10% customer (AT&T?) came close.
- Financials: Lifting Q4 EPS: Non-GAAP gross margin rose 140 bps Q/Q and 250 bps Y/Y to 71.4%, aided by a favorable product mix. GM is expected to drop to 66.5% in seasonally weak Q1.
Also helping: Sales/marketing and G&A spend respectively fell by $2.5M and $0.6M Y/Y to $17.3M and $7.3M; R&D rose by $0.4M to $18M. $1.8M was spent on buybacks. Sonus ended Q4 with $142.2M in cash/investments, $45.9M in deferred revenue, and no debt.
- VoIP hardware/software peer AudioCodes (AUDC +4.7%) is also having a good day. The Nasdaq is up 2%.
- Sonus' Q4 results, earnings release
Tue, Feb. 16, 12:46 PM
Wed, Feb. 3, 1:32 PM
- Though the Nasdaq is down 1.5%, many telecom equipment and optical component firms are rallying after network test equipment/telecom software provider Viavi (VIAV +17.6%) and optical component vendor Oclaro (OCLR +11.4%) beat calendar Q4 estimates and issued strong Q1 guidance.
- The list includes optical networking hardware firms Ciena (CIEN +3.9%) and Infinera (INFN +4.9%), component vendors Finisar (FNSR +5.3%) and Alliance Fiber (AFOP +2.2%), Wi-Fi hardware provider Ruckus (RKUS +3.5%), and VoIP and 4G signaling hardware/software firm Sonus (SONS +2.5%).
- Component maker NeoPhotonics (NPTN +14.7%) is posting double-digit gains, aided by an upgrade to Strong Buy from Raymond James. RJ says its checks point to strong sales fueled by Chinese demand and 100G metro optical buildouts.
- Oclaro guided for calendar Q1 (FQ3) revenue of $97M-$100M, soundly above a $90M consensus. The FQ2 beat was fueled by a 21% Y/Y increase in 100G product sales (53% of total revenue), which offset a 7% drop in sales of 10G and lower-speed products (35% of revenue). (earnings release)
- Viavi's beat was aided by a 5.7% Y/Y sales increase for the company's core network enablement (test instrument) business. The unit delivered Y/Y sales growth for the first time in five quarters. (earnings release)
- Viavi and Oclaro's numbers came shortly after optical component contract manufacturer Fabrinet soared in response to an FQ2 beat and strong FQ3 guidance. Fabrinet's revenue from 100G programs nearly tripled Y/Y in FQ2.
Dec. 10, 2015, 2:11 PM
- Ciena (CIEN -16.8%) has tumbled after issuing light FQ1 guidance to go with an FQ4 beat. In addition, the optical networking hardware vendor has guided for 8%-9% FY16 (ends Oct. '16) revenue growth, below a 13.8% consensus.
- With Ciena's outlook raising new fears about telecom capex (under pressure for a while), rival Infinera (INFN -3.3%) is also off, as are optical component vendors Lumentum (LITE -2.2%) and Alliance Fiber (AFOP -1.9%), VoIP/4G signaling infrastructure provider Sonus (SONS -1.6%), and network test equipment/software provider Viavi (VIAV -2%). The Nasdaq is up 0.7%.
- Northland Securities' Tim Savageaux has gone contrarian and upgraded Ciena to Outperform. He notes the company's FY16 outlook still implies an acceleration in organic sales growth (accounts for the Cyan acquisition) to over 7% from FY15's 3%, and calls the selloff an attractive entry point for buying an industry leader.
- Wells Fargo's Jess Lubert (Outperform rating) is also defending Ciena. "While we are disappointed by Ciena’s FQ1 and F2016 outlook, we sense the company’s forecast likely embeds conservative assumptions surrounding the Cyan business and the timing of revenue recognition on several large opportunities. That said, with Ciena having secured 100G metro deployments with many of the world’s largest carriers and likely to see improved mix further benefit margins, we remain positive regarding the company’s 2016/2017 prospects and see the potential for the current forecast to prove conservative if execution remains strong."
Earnings/guidance details: Ciena's FY16 op. margin is expected to be in a range of 11%-12% vs. 10.9% in FY15 before rising to ~15% in the next 3-4 years. Gross margin (non-GAAP) is expected to be in the mid-40s; it was at 44.9% in FQ4, -40 bps Q/Q and +700 bps Y/Y.
The company had two 10%+ customers in FQ4 (possibly AT&T and Verizon) that collectively made up 29.6% of revenue. Non-U.S. customers were 34.5% of revenue, and Cyan contributed $84.4M (12% of total revenue), primarily via its Z-Wave packet-optical (integrated optical networking/Ethernet switching) platform. Altogether, packet-optical products made up 70% of revenue, packet networking (Ethernet switches) 9.2%, optical transport 2.4%, and software/services 18.4%. (earnings release)
Oct. 29, 2015, 11:20 AM
- Northland Securities has upgraded Sonus (SONS +5.4%) to Outperform and set a $10 target a day after the company posted a Q3 beat and offered light Q4 guidance amid low expectations.
- The VoIP infrastructure/4G signaling software provider is now up 9% from Tuesday's close. Shares go for 2.4x a 2016 sales consensus of $265.5M after backing out net cash.
Oct. 28, 2015, 9:39 AM
- Though it beat Q3 estimates, Sonus (SONS +1.4%) is guiding for Q4 revenue of $73M-$75M and EPS of $0.18-$0.21, below a consensus of $77M and $0.22. Low expectations - shares were down 69% YTD going into earnings - appear to be preventing a selloff.
- Product revenue (drives future service revenue) fell 6% Y/Y in Q3 to $42.2M. Service revenue fell 10% to $25.6M. AT&T, Inteliquent, and CenturyLink were 10%+ customers.
- Lifting EPS: Gross margin (non-GAAP) rose to 70% from 65.9% in Q2 and 67.5% a year ago. Meanwhile, job cuts lead operating expenses to drop 9% Y/Y to $41.4M. Sonus ended Q3 with $126.9M in cash (compares with a $314M market cap), and no debt.
- Q3 results, PR
Jul. 30, 2015, 10:14 AM
- Barrington Research's Ted Moreau, Jr. has upgraded Sonus (NASDAQ:SONS) to Outperform a day after the company beat Q2 estimates and provided better-than-expected Q3/2015 guidance.
- Moreau expects the new customer wins announced by Sonus (inc. two tier-1 carriers) to lower its custom concentration, and is relieved the company reiterated its full-year revenue guidance. He adds Sonus' ongoing cost cuts could bring op. margin "back into the mid-teens by Q4."
- The VoIP infrastructure and 4G signaling hardware/software provider is up 25% over the last two days.
Jul. 29, 2015, 9:21 AM
- In addition to beating Q2 estimates, Sonus (NASDAQ:SONS) is guiding for Q3 revenue of $65M and EPS of $0.05-$0.08 vs. a consensus of $64.9M and $0.05, and full-year revenue of $245M-$250M and EPS of -$0.10 to $0.00 vs. a consensus of $245.6M and -$0.17.
- Lifting Q2 EPS: Gross margin (non-GAAP) was 65.9%, +440 bps Q/Q and +370 bps Y/Y, and above guidance of 64%-65%. GM is expected to rise to 67.5%-68.5% in Q3.
- As expected (previous), product revenue was weak, falling 41% Y/Y to $27M. Service revenue (driven by past product sales) fell 7% to $27.7M. Thanks to job cuts, operating expenses fell 8% to $40.9M. Two new tier-1 carrier customers were obtained - one in Asia-Pac, the other in Central/Latin America. The carriers might be China Mobile and America Movil, judging by Sonus' descriptions.
- Shares have risen to $6.63 premarket.
- Q2 results, PR
Jul. 29, 2015, 9:13 AM
Jun. 30, 2015, 12:18 PM
- Sonus (NASDAQ:SONS) has amended a credit agreement formed a year ago with Bank of America. The revised agreement features a $15M credit facility maturing June 30, 2016. It also stipulates Sonus maintain a cash balance of at least $85M, and quarterly revenue of at least $50M. The company is expected by the Street to have Q2 revenue of $54.1M, and Q3 revenue of $65.1M. (8-K filing)
- After opening slightly higher, shares have steadily sold off. 1.08M shares have changed hands vs. a 3-month daily average of 1.23M. The VoIP infrastructure hardware/software provider had $84M in cash/short-term investments at the end of Q1, and just $750K in debt.
Apr. 24, 2015, 3:17 PM
- Today's notable tech gainers include Chinese microblogging leader Weibo (WB +9.4%), VoIP/4G signaling infrastructure provider Sonus (SONS +5.9%), Chinese mobile game publisher Sky-mobi (MOBI +7.2%), Chinese auto site Bitauto (BITA +5.6%), and cloud e-mail encryption software provider Zix (ZIXI +3.2%). The Nasdaq is up 0.7%.
- Notable decliners include set-top/pay-TV infrastructure provider Arris (ARRS -4.5%), M2M/fleet management hardware and software provider CalAmp (CAMP -6.6%), and optical component vendor NeoPhotonics (NPTN -5.9%).
- Weibo, Sky-mobi, and Bitauto are taking part in a fresh Chinese tech rally. Weibo, also up strongly on Wednesday, is now up 21% from Tuesday's close. Zix is up 11% since posting Q1 results and reiterating its full-year sales guidance on Tuesday; a 14.7% Y/Y Q1 increase in orders to $14.3M is going over well. Sonus' gains come two days after the company posted Q1 results that were slightly better than the guidance provided in its March 24 warning.
- Arris is giving back some of the huge Thursday gains seen on account of its $2.1B deal to buy set-top rival Pace (and take advantage of its lower tax rates); Synergy Research estimates Arris/Pace will have a combined 17% global video infrastructure share (nearly even with Cisco's 18%), and a set-top share of ~30%. CalAmp is returning some of the huge Wednesday gains seen due to its FQ4 beat and solid FY16 guidance.
- Previously covered: Chip stocks (a lot of them), Amazon, Microsoft, 3D Systems, Unisys, Silicon Motion, Rackspace, Netgear, AMSC, Verisign, Acacia, Infosys, Juniper, Ubiquiti, Maxwell, Synaptics, HomeAway, Gigamon
Apr. 15, 2015, 3:19 PM
- With the Nasdaq up 0.8% in the wake of a well-received Intel Q1 report, major tech gainers are easily outpacing decliners.
- Notable gainers include 4G router/M2M module maker Sierra Wireless (SWIR +3.6%), security tech plays KEYW Holding (KEYW +6.9%) and Vasco (VDSI +5%), Chinese mobile game publisher iDreamSky (DSKY +11.1%), sapphire wafer/substrate provider Rubicon (RBCN +9.1%), and telecom equipment vendors Ubiquiti (UBNT +4%). Sonus (SONS +3.6%), and Adtran (ADTN +4.1%).
- Sierra, Ubiquiti, Sonus, and Adtran could be benefiting from hopes the Nokia/Alcatel-Lucent merger will spark fresh telecom equipment M&A. Rubicon's gains come a day after shares closed just $0.15 above a 52-week low of $3.56.
- Previously covered: 3D printing stocks, chip stocks, First Solar, Enphase, Mobileye, Yandex, Universal Display, Geospace, Mellanox/QLogic, Angie's List
Mar. 24, 2015, 2:59 PM
- Sonus (SONS -32.4%) remains below $9 after cutting its Q1 guidance well below consensus, while blaming delayed orders. Fellow VoIP/unified communications tech plays AudioCodes (AUDC -5.1%) and BroadSoft (BSFT -2.7%) are following Sonus lower.
- Wells Fargo, William Blair, and Barrington Research have downgraded Sonus today. Blair's Dmitry Netis (downgrade to Market Perform) calls the shortfall "shocking," and thinks Sonus' concurrent job cut announcement suggests "the issue is broader than just one large customer miss.”
- However, Netis suspects the problem is company-specific, with competition from Oracle/Acme Packet a possible culprit. "With many large TDM-IP transformation projects finally coming on line ... Oracle, according to our industry contacts, seems to be winning the bulk of these deployments, given their early market incumbency."
- Sonus, AudioCodes, and BroadSoft all rallied last month in response to BroaSoft's strong Q4 results and Q1/2015 guidance.
Mar. 24, 2015, 12:45 PM
Mar. 24, 2015, 9:18 AM
Sonus Networks, Inc. provides networked solutions for communications service providers and increasingly, to enterprises to help them advance, protect and unify their communications and improve collaboration. It helps many of the world's communications service providers and enterprises embrace... More
Industry: Communication Equipment
Country: United States
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