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    Sonus Networks jumps 23% on Surprising Q4 Results and Bullish Guidance

    Sonus Networks Inc. (Nasdaq: SONS) shares surged nearly 23% to trade at $3.79 this morning, fueled by the company’s quarterly results and outlook for 2011 run above analyst expectations. The stock peaked at $3.75 last October and has not exceeded the $4 level since August 2008, however, it hit as high as $4.13 in yesterday’s extended action.

    SONS is a leading provider of voice infrastructure solutions for wireline and wireless service providers, allowing to develop converged voice over IP networks. The company’s products are a new generation of carrier-class infrastructure equipment and software that enables voice services to be delivered over IP packet-based networks. SONS’ target customers include communications service providers, like long distance carriers, local exchange carriers, Internet service providers, wireless operators, cable operators, international telephone companies and carriers that provide services to other carriers.

    Last May, SONS announced the availability of NBS 5200 Network Border Switch as the first product on ConnexIP platform, a new foundation for the next generation of the company’s IP-based products. The ConnexIP platform is facilitating IP session-based communications and represents a key element in the company’s strategy to bring industry-leading performance and carrier-grade reliability to the session management market.

    The company reported that its Q4 2010 net income rose 11% as revenue from both products and services increased. For the last quarter, the company reported its net income rose to $11.4 million from $10.3 million in the year-ago quarter. On a per-share basis, earnings were flat at $0.04 per share as average shares outstanding increased in the 2010 period.

    Revenue for Q4 2010 hit $83 million, up 94% from $42.7 million in Q3 2010, and 21% from $68.7 million in Q4 2009. The growth was driven by solid product revenue and robust new customer additions. The company reported revenue from 103 customers in Q4 2010, including eight new customers. This compares to 100 customers in Q3 2010 and 87 customers in Q4 2009.

    SONS’ Q4 2010 results beat by a huge margin the analyst consensus estimates. According to Thomson Reuters, the market was expecting the company to post a loss of $0.01 a share on revenue of $65.1 million.

    The company expects to achieve total revenue between $265 million and $285 million for 2011. SONS reported that stronger traction with NBS products gave it the confidence to issue an optimistic guidance for 2011. Non-GAAP gross margin is expected to run within the range of 59% to 63%, approximately flat with the 61.4% reported in 2010 and total non-GAAP operating expenses are expected to be in the range of $143 million to $147 million for 2011. Analysts were expecting the company to lose $0.03 per share on revenue of $257.4 million.

    SONS finished the year with an excellent balance sheet, reporting approximately $408 million in cash, and no long term debt. The company’s cash balance, which nears $1.48 per share, represents approximately 40% of its market capitalization. However, SONS is achieving magnitude, scale and recognition to move its technology platform to a new level and into additional markets.

    Moreover, the last quarter results suggest that SONS is gaining market share from the most of its competitors, which in turn positions it to aggressively expand, going forward. Besides, the company has developed additional functionalities to its product offering to further enhance and leverage the excellent functionality of its IP platforms. In addition, the company’s target markets are still in the early phases and are expected to grow at high double-digit growth rates.

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