Friday, July 9, 2010

Sandvine - Record High Results - So Why the Plunge?

Sandvine reported yesterday record high quarterly results with revenues of C$22.4M and GAAP net income of C$2.0M (non-GAAP1: C$3.7M), and 9 new customers. See some charts below.

See "Sandvine Reports Q2 2010 Results" - here.

Despite the nice results, Sandvine shares fall more than 9% during Thursday's trading. A possible explanation is brought by Eric Lam, from the FINANCIAL POST, quoting Tom Astle, analyst with Dundee Capital Markets:
It’s making progress with its product and customer diversity and it’s a leader in an important product category with a rock solid balance sheet, but we remain challenged on finding a path to medium term profitability .. The company reported its lowest number of bookings [number was not provided - and Dave Caputo, Sandvine's CEO, did not provide any guidance for Q3] in eight quarters and below the sales level of the quarter. This is the first time the company has ever highlighted this metric"

See "Sandvine’s weak bookings cast doubt over prospects" - here.

Nevertheless, the company reported record level of RFPs in process, although said that "vast majority" of revenues come from existing customers and do go through an RFP process. The company also reported on Q2 deals resulting from the agreements with Nokia Siemens Networks (NSN) and Motorola.

Mr. Caputo also hinted on some business with AT&T (see "DPI Deployments (10): AT&T Uses Openet for iPad" - here).

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