Shares of Acme Packet (Nasdaq: APKT) hit a 52-week low on Friday. Let's look at how it got here and whether dark clouds are ahead.

How it got here
The session border controller, or SBC, maker reported second-quarter earnings last night, adding to a string of disappointing earnings releases over the past year. Shares have now lost more than 80% of their value since briefly topping $80 last year.

Last year when I was still optimistic on Acme Packet's prospects, I called a sell-off on preliminary results a case of market overreaction. There should have been no surprises once the official third-quarter digits were released, but shares sold off again. It would go on to again issue a warning on its fourth-quarter results, and the official release made me wonder if it could ever deliver. By the time its first-quarter release was upon us, I figured that surely shares must be bottoming out. How much worse could it get? Wrong. Finally, upon yet another warning on second-quarter performance, I simply gave up.

The second-quarter results came in in line with Acme Packet's warning, but the company had to reduce its outlook for 2012, expecting sales between $270 million and $275 million, with an adjusted profit of $0.43 to $0.47 per share. Those don't look so great compared with the $302.6 million in sales and $0.76 per share in adjusted profit that the market was expecting.

If you haven't already, now may be time to give up on Acme Packet.

How it stacks up
Let's see how Acme Packet stacks up with its peers.

APKT Chart

APKT data by YCharts.

Let's throw in some fundamental metrics for comparison.



Sales Growth (TTM)

Net Margin (TTM)


Acme Packet 34.7 19.7% 10.9% 7.8%
Sonus Networks (Nasdaq: SONS) N/A 1.0% (2.6%) (1.6%)
Cisco Systems (Nasdaq: CSCO) 11.4 6.3% 16.1% 14.9%
Juniper Networks (NYSE: JNPR) 35.4 (2.1%) 5.9% 3.6%

Source: Reuters. TTM = trailing 12 months.

In fairness, some of the weakness is out of Acme Packet's control, as the IT spending environment has been extremely cautious, particularly within telecoms that are Acme Packet's primary customers. Those spending slowdowns hurt smaller companies like Acme Packet, and Sonus get beaten up pretty bad, while larger companies like Cisco and Juniper, while they still get hurt, don't get hurt as badly.

What's next?
With Acme Packet's gloomy guidance, it looks like things will get worse before they get better, if they get better at all. The story of riding the wave to voice over LTE, or VoLTE, was and remains compelling, but ultimately the company needs to walk the walk in addition to talking the talk.

Unfortunately, it simply hasn't been.

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Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Acme Packet. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.