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Acme Packet Mauls Bears

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Shorting premium priced but high-quality businesses is dangerous. Just ask anyone on the wrong side of Acme Packet (Nasdaq: APKT  ) today.

Last night, the market's leading provider of session border controllers reported financial results that beat the Street's expectations and raised its 2011 outlook. Management now expects $1.05 in non-GAAP per-share earnings on $300 million in revenue. Earlier estimates called for $0.99 to $1 on $286 million to $287 million in revenue.

For the quarter, Acme Packet said revenue soared 70% to $70.2 million. Non-GAAP profits more than doubled to $0.26 a share. Analysts were looking for $60.8 million and $0.23 a share, respectively.

Big-money investors apparently see an opportunity that analysts don't. Shares of Acme Packet are up more than 18% on heavy volume as I write this. The move more than makes up for last month's cloud computing sell-off, instigated by a less-than-perfect earnings report from F5 Networks (Nasdaq: FFIV  ) .

Acme's competitive position is also getting stronger. Co-founder and CEO Andy Ory told investors during yesterday's earnings conference call that emerging networks built entirely on the Web will "drive further infrastructure investments requiring our solutions."

He referenced videoconferencing and unified communications and collaboration, specifically. Ory's point? Advanced telecom features are only now becoming available on VoIP networks, and those networks need SBCs.

As the guy who picked Acme Packet for Motley Fool Rule Breakers, I think he's right. Networking and telecom infrastructures aren't like chip architectures. Cisco Systems (Nasdaq: CSCO  ) and Juniper Networks (Nasdaq: JNPR  ) , though strong growers, have yet to convince IT managers that one box can handle everything a network needs.

Demand persists for F5's load balancers, Acme Packet's SBCs, and Riverbed Technology's (Nasdaq: RVBD  ) wide-area-network optimizers because each plays a role in making enterprise networks and the public Internet faster and more efficient. Cisco and Juniper can't do the job alone.

But that's just my take. Now it's your turn to weigh in. Will competitive threats end the Acme Packet growth story prematurely? Please vote in the poll below and then leave a comment to explain your thinking.

Interested in more info on the stocks mentioned in this story? Add Acme Packet, Cisco Systems, F5 Networks, Juniper Networks or Riverbed Technology to your watchlist.

Juniper Networks is a Motley Fool Big Short short-sale pick. Motley Fool Alpha has a short position in Juniper and owns shares of Cisco. Acme Packet is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a bull call spread position in Cisco. The Fool is also on Twitter as @TheMotleyFool. Like everyone else, its disclosure policy is just trying to stay warm.

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