Acme Packet, Inc. Earnings: Increased Costs Strains Margins as Profit Drops

Rising costs hurt Acme Packet, Inc. (NASDAQ:APKT) in the fourth quarter as profit dropped from a year earlier. Acme Packet provides session border controllers that enable service providers to deliver secure interactive communications–voice, video, and other real-time multimedia sessions–across Internet Protocol network borders.

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Acme Packet Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the communication equipment company  fell to $8.7 million (12 cents per share) vs. $14.5 million (21 cents per share) a year earlier. This is a decline of 39.9% from the year earlier quarter.

Revenue: Rose 18.2% to $83 million from the year earlier quarter.

Actual vs. Wall St. Expectations: Acme Packet, Inc. reported adjusted net income of 26 cents per share. By that measure, the company beat the mean estimate of 19 cents per share. It fell short of the average revenue estimate of $85.2 million.

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 41.5%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 70.2% from the year earlier quarter.

Gross margin shrank 2.3 percentage points to 81.6%. The contraction appeared to be driven by increased costs, which rose 35.4% from the year earlier quarter while revenue rose 18.2%.

The company has now seen net income fall in each of the last two quarters. In the third quarter, net income fell 24.3% from the year earlier quarter.

Acme Packet topped expectations last quarter after falling short of forecasts in the third quarter with  net income of 12 cents versus a mean estimate of net income of 14 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from 25 cents a share to 18 cents over the last sixty days. The average estimate for the fiscal year is now 69 cents per share, down from 80 cents sixty days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com