Acme Packet's Numbers Back Up Rally

NEW YORK ( TheStreet) -- Shares of Acme Packet ( APKT) rose in brisk after-hours trading on Tuesday after the Bedford, Mass.-based maker of network management products posted a 70% year-over-year revenue jump in its latest quarter.

The company, whose session border controllers sit between Internet protocol networks and manage data flow, topped Wall Street's expectations for its December period on both the top and bottom lines and lifted its fiscal 2011 outlook as well.

The stock was last quoted at $58.49, up 4.6%, on volume of more than 400,000, according to Nasdaq.com. Based on a regular session close at $55.92, the volatile shares have risen more than 400% in the past year, hitting a 52-week high of $62.96 on Jan. 6.

For the three months ended Dec. 31, Acme Packet reported earnings of $14.5 million, or 21 cents a share, up from a year-ago equivalent profit of $9.1 million, or 14 cents a share. On a non-GAAP basis, excluding stock-based compensation expenses and other one-time items, the company said it earned $17.9 million, or 26 cents a share, for its fiscal fourth quarter, 15% above the average estimate of analysts polled by Thomson Reuters for a profit of 23 cents.

Revenue came in at $70.2 million for the quarter, representing sequential improvement of 24% and easily beating the analysts' view of $60.9 million. Acme Packet has now beaten Wall Street's profit view in nine straight quarters.

The company also said it now sees non-GAAP earnings of $1.05 a share on revenue of roughly $300 million for fiscal 2011. In late October, it was projecting earnings of 99 cents to $1 per share for fiscal 2011 with revenue ranging from $286 million to $287 million.

The current Thomson Reuters consensus view is for earnings of $1.04 a share on revenue of $296.3 million for the year ending next December.

If Acme Packet is able to deliver on its $300 million outlook for fiscal 2011 it will have more than doubled revenue from 2009's total of $141.5 million.

The company was facing a high bar ahead of its report with its trailing price-to-earnings ratio at roughly 97X following the incredible run-up in the past year and its forward PE based on fiscal 2011 expectations sitting at a little less than 54X.

Accordingly, some caution has crept into Wall Street's view of the stock with seven of the 16 analysts covering the shares at hold (6) or sell (1); although the majority still remain bullish at either strong buy (1) or buy (8). The 12-month median price target of $55, however, seems an acknowledgment that the shares may have a tough time rallying much higher from here.

Back on Jan. 25, the shares dipped down to $49.99, closing below $50 for the first time since Nov. 30 amid concerns about companies with any association to cloud computing. Tuesday's news looked to be giving a slight lift to competitors like Savvis ( SVVS) and Internap Network Services ( INAP); although volume in those names was scant.

-- Written by Michael Baron in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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