Net phone equipment maker lifts IPO price
When telecommunications hardware company Acme Packet of Burlington goes public today, the company expects to raise more money than it originally bargained for -- up to $17 million more.
Acme Packet yesterday boosted the price of its initial public offering, from $6.50 to $7.50 a share to $8 to $9 a share. The repricing could let Acme Packet raise a maximum of nearly $103 million from today's offering.
Not many technology offerings have been increasing their prices of late; indeed, there haven't been many at all. According to Thomson Financial and the National Venture Capital Association, the third quarter of 2006 was the weakest in three years for high-tech stock offerings. There were only eight, with a total value of $934 million. Acme Packet's strong prospects are mainly because it caters to one of the tech industry's hottest segments -- next-generation phone systems based on Internet technologies.
Acme Packet's venture investors, including Menlo Ventures, Advanced Technology Ventures, and Canaan Partners, are betting on the growing popularity of voice-over-Internet-protocol or VOIP telephone networks. These are systems that use Internet technologies to carry voice telephone calls. VOIP promises phone systems that are far more versatile than traditional systems, and also cheaper and easier to build. Worldwide use of VOIP phone networks grew 83 percent last year, according to British market research firm Point-Topic. Another research firm, TeleGeography of Washington, DC, said that Americans spent $1 billion placing VOIP calls last year, and will spend $8.1 billion on VOIP services in 2010.
But because VOIP networks rely on Internet technology, they're subject to the security problems often encountered on the Internet. Phone companies are worried that criminals and vandals could begin hacking telephone systems as they now hack corporate or home networks. ``Carriers are nervous about IP, because it's more open," said Thomas Valovic, director of VOIP infrastructure research for IDC Corp. in Framingham. ``They're concerned about security."
Acme Packet makes ``session border controllers," devices that help to secure the network. The controller sits between two or more VOIP phone networks, allowing them to connect to each other, while securing each network against illicit activities.
Acme officials declined to comment for this story, citing federal ``quiet period" restrictions on commenting immediately before a stock offering.
Jon Arnold of J Arnold & Associates , a VOIP consultancy in Toronto, said that session border controllers are vital because VOIP networks must set up ``peering" arrangements with rivals to exchange telephone traffic. But the same rivals mustn't get full access to sensitive corporate data. ``The carriers are getting to the point where they have to start peering with each other," said Arnold. ``You need stuff like this to do it. If you expose your databases to your competitors, you're going to be out of business."
Phil Stiller, research analyst at Renaissance Capital in Greenwich, Conn., said that Acme Packet is the leader in the field. ``The market last year was about $85 million in revenue, and this company right now has about half of that market." Stiller predicted that global demand for the controllers would reach $600 million by 2009.
Hiawatha Bray can be reached at bray@globe.com. 
