January 18, 2013 / 7:00 PM / in 5 years

Sandvine eyes growth in Asian telecom orders

(Reuters) - Sandvine Corp, which makes equipment for telephone companies to monitor roaming usage, expects more orders from Asia this year as its customers seek ways to manage traffic and improve billing services, its chief executive said.

The Canadian company, whose customers include Japan’s NTT Communications, has won orders worth about $20 million from Asia since May, a trend that helped it to return to profit in the fourth quarter after four consecutive quarterly losses.

“We have had some excellent success in the Asia Pacific region,” Dave Caputo, chief executive and co-founder of Sandvine, told Reuters in an interview. “We are expecting growth in that region.”

The Asia Pacific region contributed 26 percent of Sandvine’s revenue of $87.9 million in the year ended November. Europe, the Middle East and Africa contributed 17.6 percent and North America - still the company’s largest market - brought in 41.6 percent.

Waterloo, Ontario-based Sandvine, which has a market value of about C$252 million ($256 million), added nine clients worldwide during the fourth quarter, up from seven new clients a year earlier.

At least two analysts have raised their ratings on the company’s stock since it announced fourth-quarter revenue of $27.5 million on January 10, according to Thomson Reuters StarMine data. Its shares have risen 31 percent this year.

Among the equipment made by Sandvine is a product that enables telephone companies to monitor their customers’ roaming usage and inform them when they are nearing their limit, protecting them from “bill shock”, or a spike in charges.

Caputo said repeat orders from existing customers, which include U.S. cable TV provider Comcast Corp and Spanish telecom company Telefonica SA, would account for the “lion’s share” of Sandvine’s revenue this year.

CIBC World Markets analyst Todd Coupland wrote in a note to clients last week that Sandvine’s products were in demand from wireless carriers seeking increased data consumption and ways to make money from usage and network capacity.

“Sandvine’s patience appears to be paying off,” he wrote.

‘TOO SMALL FOR MACRO TRENDS’

Caputo, one of the seven people who co-founded Sandvine in 2001, said a wider slowdown in telecoms spending and competition in the crowded mobile phone sector had not affected the company.

“We are a little bit too small to participate in the macro trends around equipment purchases,” said the chief executive, who is recuperating from an Achilles tendon injury sustained during a basketball game.

“People spend billions of dollars rolling out consumer internet offerings. We are still a relatively small and strategic part of that,” he said.

Caputo also said the company’s relationship with Telefonica had stabilized after delays in closing several projects with the Spanish company contributed to lower-than-expected earnings in the second quarter of 2012.

He said Sandvine might consider buying small technical companies, although he added that acquisitions were “not a huge focus”.

($1 = 0.9855 Canadian dollars)

Editing by Robin Paxton and Don Sebastian

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