Northland: SIP trunking adoption could push Acme Packet to 20% growth by 2013

Vendor-agnostic session border controllers (SBCs) will continue to play a key role as more and more businesses adopt SIP trunking for their voice and unified communications (UC) needs, Acme Packet executives and industry analysts said during a recent summit held at Harvard University.

Data from the SBC vendor's event played a part in its upgrade by Northland Capital Markets from "Market Perform" to "Outperform." The research firm held to a share price target of $36, and predicted that Acme Packet (Nasdaq: APKT) will grow its earnings 33 percent in 2013.

"Our checks suggest Acme Packet's near-term growth stagnation is a result of carrier providers revisiting their LTE plans," said Catharine Trebnick, senior analyst at Northland Capital Markets, in an analyst note. "(Management) reiterated that SIP trunking remains the key growth driver for SBC adoption. The company's fundamentals are solid and we expect the company will be back to 20% growth in 2013."

Session border controllers, as part of an IP service delivery architecture, play a role in managing flow of data in IP networks and help make VoIP calling, as well as other UC applications, possible.

With only 8 percent of enterprises in North America utilizing SIP trunking as of the end of 2010, there is plenty of room for growth. And while SIP trunking is the top service using SBCs, the equipment also plays a role in IMS and next generation networks.

But despite what appears to be a rosy outlook for Acme Packet, the competition is moving up as well. More than 30 vendors are operating in the dynamic enterprise SBC market space, noted Diane Myers, Infonetics Research directing analyst for VoIP and IMS, in a presentation during the summit.

Still, Acme Packet holds nearly 50 percent of the total session border controller market, Myers said, a global market that's worth approximately $240.9 billion. Infonetics is forecasting a 20 percent CAGR (compound annual growth rate) for service provider SBCs between 2011 and 2016.

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