Investopedia: Acme Packet Another Company Waiting On The Carrier Revival

There's a long list of companies out there where investors are hoping that carriers finally get back to spending this year, a list that includes Alcatel-Lucent (NYSE:ALU), Adtran (Nasdaq:ADTN), Juniper (NYSE:JNPR) and Acme Packet (Nasdaq:APKT). While Acme Packet enjoys good share in the session border controller market (SBC) and ought to benefit from adoption and migration to Voice over LTE (VoLTE) and IMS, bears argue that competitors and alternative technologies will steal much of that potential.

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Investopedia: Cisco Dunks ... On The Kiddie Hoop

For all of the excitement about Cisco's (Nasdaq:CSCO) "strong" first quarter, an important detail seems to be overlooked. Namely, that expectations have been going down steadily on Cisco for some time, and if the company couldn't beat this low hurdle, that would be a sign of some serious problems indeed. Though I've long been a bull on Cisco's under-appreciated inherent value, investors should keep a little perspective here and realize that Cisco is not exactly fully in the clear just yet.

A Mildy Encouraging First Quarter  
After a rough stretch of financial underperformance, Cisco did announce estimate-beating revenue and 5% year-on-year growth. Product sales grew 3% from last year and were roughly flat with last quarter, while service revenue picked up 12 and 1%, respectively. Switching and routing were both reasonably strong on a sequential basis (up almost 2 and 5%, respectively) and make up about two-thirds of the product revenue base.

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Ciena's Second Act

Optical networking company Ciena (Nasdaq:CIEN) is, if nothing else, a survivor. Although Ciena is thought of as a classic tech-bubble stock, this one actually did not peak until late in 2000 - well after the peaks for rivals like Cisco (Nasdaq:CSCO), Alcatel-Lucent (NYSE:ALU) and the Nasdaq in general. Like Alcatel though, Ciena fell hard and fast as its customers dramatically over-spent on equipment and many went out of business. What remains to be seen is whether Ciena has the ability to produce a second act of profitability and growth. 

A Typical Tech Quarter ... More or Less  
Ciena's quarter was not all that different from many others in the tech space. Revenue growth on an annual basis looked very strong (up 137%), while sequential growth was more moderate (up 7%). More specific to Ciena, the company's organic business was rather soft, and growth was really driven by the MEN business acquired a little while ago from Nortel.

Profitability was a mixed bag. Although analysts seem relatively pleased with the company's gross margin, the company nevertheless saw this profitability metric drop on both an annual (down 120 basis points) and sequential (down 150 basis points) basis. As for operating income, there wasn't any - the company had an operating loss this quarter, last quarter and in the year-ago quarter.

One point of note is the company's SG&A spending for the quarter. On one hand, this is a company that pays salespeople for orders and the jump in sales/marketing spending could be seen as a sign of more revenue on the way. On the other hand, "general and administrative" expenses basically tripled from the year-ago level, so it may be that the company is just spending more overall. (For more, see Fundamental Analysis: The Income Statement.)

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