Why Sell Now?
Despite the good future growth prospects, Acme revenues were down 10.7% in 2012 (versus 2011), due to a slower than anticipated uptake of VoLTE rollouts at various carriers. Most operators do not see VoLTE as being ready for "prime time" from a network control plane and operational perspective to justify any meaningful level of rollouts this year.
Not surprisingly, carriers such as Verizon and AT&T indicated they do not plan to deploy the technology until at least 2014, dampening the prospects for more SBC rollouts, despite some implementations done last year (such as MetroPCS (PCS)). In addition, enterprise SBC spend also grew at a slower pace (closer to 5%, as opposed to the 20% previously forecast) due to slower European sales and a shift in the US market towards spending by small and medium-sized business, which historically has not been a forte for Acme. While the overall prospects for Acme are good, as are its products, the company was faced with a longer period of slower growth, and the stock price reflected this, making the company quite attractive to Oracle.
Was That Oracle?While the acquisition of Acme Packet itself was not unexpected, the buyer did surprise some industry pundits. Oracle, after all, is better known for its database, middleware, applications, software and hardware systems acumen than as a telecom infrastructure vendor. The purchase, though, is not the first time that Oracle has made a foray into the world of telecommunications. In February 2010, for example, the company bought Israeli startup Convergin, which provides a carrier-grade IT platform, enabling operators to evolve their service delivery capabilities at a lower total cost of ownership. The Acme Packet product lineup fits nicely into Oracle's "Service Delivery Network" vision and will be combined as part of the various CRM (Customer Relationship Management), ERP (ERP), OSS (Operations Support System) and BSS (Business Support System) products that the Oracle Communications unit already has in its arsenal. Acme Packet will also act as a Trojan horse for Oracle, enabling the tech giant to upsell its software and IT solutions into the company's installed base. This move could be quite opportune, considering the advent of Big Data and the Cloud, which enable Oracle to pitch its analytics and cloud service architectures to telecom operators. Furthermore, there could be some interesting synergies in the service and solution integration arena, where Oracle already has some capabilities from its Sun Microsystems acquisition. More importantly, the acquisition also signals Oracle's intent to keep enhancing its telecoms portfolio, after recently buying a variety of cloud-based startups and beefing up its service delivery portfolio via a new service broker. Now the company has made a "network edge" play, placing it at the border of enterprise and service provider networks. Time will tell what the next telecom move for Oracle will be, but we believe beefing up in areas such as SDN (Software Defined Networking) or SPIT (Service Provider Information Technology) could be possibilities. --Written by Ron Gruia. Follow @rgruia This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.