Acme Packet: Almost as Big as Vonage

Acme Packet, a maker of IP equipment, just went public last week. And already, its market cap approaches that of Vonage, much better known and spending hundreds of millions of dollars on marketing. Acme's successful IPO may signal that the market is ready for more VoIP gear IPOs.
Olga Kharif

Acme Packet (APKT), a maker of equipment allowing for secure Internet Protocol (IP) calling and video sessions, just went public last week. Looking at what's been happening with its shares (they are up 6% since the IPO), we can already see that Wall Street is treating the outfit better than Web-calling giant Vonage, whose shares tanked after it went public. Investors, apparently, already value Acme, a little-known company, at $1.13 billion -- nearly as high as Vonage, with a $1.2 billion market cap. That's amazing, considering that Vonage has spent hundreds of millions of dollars to build up its consumer brand through marketing.

In a way, that's no surprise. As of the end of last year, Acme was at break even, while Vonage's profitability is nowhere in sight. As VoIP expert Jon Arnold said in a recent blog entry, "Vonage's revenues are 10-15 times that of Acme's, but look who's making money." Equipment vendors are also better positioned to make money in this market than service providers like Vonage (VG), facing competition from cable companies and telcos. Still, I wonder if this is a sign that Vonage is undervalued at this point.

Bottom line: Acme's successful offering may signal that the market is ready for more VoIP equipment IPOs.

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