July 7, 2011 / 11:22 AM / 7 years ago

UPDATE 2-Sandvine posts narrower Q2 profit as expenses surge

* Q2 rev up 11 pct to $24 mln (Adds R&D spend in para 1, background in para 6, share closing in para 7)

July 7 (Reuters) - Canadian network equipment maker Sandvine Corp posted a steep decline in quarterly profit, hurt partly by a surge in research and development expenditure.

For the May quarter, net income was $63,000, or breakeven per share, compared with a net income of $1.7 million, or 1.2 cents per share a year earlier.

Revenue rose 11 percent to $24 million, about half of which came from outside North America.

Excluding items, the company earned a seventh of a cent.

Expenses for the quarter rose 28.3 percent to $18.4 million, driven mainly by a 63 percent hike in research and development spend.

Sandvine, along with rivals Bridgewater Systems Corp and Redknee Solutions Inc , has seen network congestion and greater use of smartphones drive up demand for its products and services.

Shares of the Waterloo, Ontario-based company closed at C$2.35 on Wednesday on the Toronto Stock Exchange. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Prem Udayabhanu)

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