Sonus Networks made three announcements for the price of one this morning. The first was of the inorganic variety, and the other two were of the financial variety.
On the inorganic front, Sonus has bought a suite of SDN technology assets from Treq Labs. They’re paying $10.1M in cash plus a bunch of shares if the business unit pans out over the next three years. If the SDN business earns $60M in revenue from 2015 through 2017 it would be 6.6M shares, and if revenue booms to $150M it would blossom to about 17.6M. That last figure would be worth $70M at today’s stock prices, so it’s not a minor incentive. Sonus clearly wants to widen its focus, moving into other parts of the network. Just what the communications vendor has planned for the SDN world is unclear. Current customers for Treq’s technology include Pacnet – part of their PEN network offering I assume — and the financial services provider State Street.
On the financial front, Sonus pre-announced revenues of about $77M and non-GAAP earnings per share of $0.03, which are inline with guidance, but perhaps a bit light compared to expectations on the revenue side. Meanwhile, the company plans to do a 1 for 5 reverse split at the end of this month, which explains perhaps why they are pre-announcing numbers that aren’t very surprising. Regardless, come February the company will look quite different.
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Categories: Financials · SDN · Telecom Equipment
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SONS looks to be a major winner of the proliferation of SDF and NFV, hard to imagine this stock not breaking the $4.25 level after several years and running to $8 which seems more like fair value at roughly $2BN. CEO buying 2MM shares in the open market gives me conviction this is a homerun from here.