The Sonus Sell-Off...

(RTTNews) - This network solutions provider slashed its financial forecast for the first quarter and said it initiated a company-wide review of its cost structure.

The Stock In Focus...

Sonus Networks Inc. (SONS) provides networked solutions for communications service providers and enterprises, and help them embrace the next generation of Session Initiation Protocol or SIP and 4G/LTE or Long Term Evolution-based solutions, including Voice over Internet Protocol (VoIP), video and Unified Communications (UC) through secure, reliable and scalable Internet Protocol (IP) networks.

The company's products include session border controllers or SBCs, diameter signaling controllers (DSCs), policy/routing servers, media and signaling gateways and network analytics tools.

Customer Concentration

Sonus' solutions are deployed in many of the world's leading service provider and enterprise networks, including AT&T, Belgacom, BT Group, Cable & Wireless, CenturyLink, CITIC 1616, Global Crossing, KDDI, KVH, Level 3, NTT Communications, Orange Business Services, Softbank Corp., TalkTalk, T-Systems Business Services (a division of Deutsche Telekom Group), Verizon and XO Communications.

In recent years, the company has seen a significant increase in the number of enterprise customers purchasing its SBC product portfolio as a result of its overall channel partner program.

AT&T accounted for 19% of the company's revenues in 2014, 15% in 2013 and 20% in 2012.

The company achieved a record high of 806 total customers in the fourth quarter of 2014, which is up almost 40% from the prior year.

Portfolio Expansion

The company has substantially expanded the portfolio of products expected to contribute to its revenue growth. In addition to enhancing its industry leading portfolio of SBCs, products added recently to the company's portfolio include DSCs - acquired from Performance Technologies Inc. in February 2014, and the technology assets acquired from Treq Labs Inc. in January 2015.

For full year 2014, Sonus Network generated 68.1% of its Total Product revenue from Growth-related products, up from 58.2% for full year 2013 and 44.1% for full year 2012.

Latest Q4 Performance

Mark Greenquist, chief financial officer, commented, "...the fourth quarter of 2014 marks the twelfth consecutive quarter since the Company began giving quarterly guidance that it has met or surpassed non-GAAP EPS expectations. The fourth quarter also marks the seventh consecutive profitable quarter for the Company on a non-GAAP basis. We look forward to building on this momentum in 2015."

During the quarter, the company achieved a record high of 806 total customers, which is up almost 40% from the previous year.

A 1-for-5 reverse split of the company's common stock became effective on the NASDAQ Global Select Market as of the commencement of trading on January 30, 2015.

For the latest fourth quarter, the company's pre-reverse split GAAP loss was $0.01 per share versus breakeven per share last year. Non-GAAP earnings totaled $0.03 per share compared to $0.02 prior year.

Post-reverse split GAAP loss was $0.04 versus breakeven per share in the year-ago quarter, while non-GAAP earnings per share was $0.15 versus $0.12 last year.

Total company revenue for the quarter improved to $76.8 million from $76.2 million generated a year earlier.

Sonus Network ended the fourth quarter of 2014 with $148 million in cash, cash equivalents and investments, including the impact of the share repurchases.

Cost Reduction Review

Most recently, Sonus initiated a company-wide review of its cost structure to help ensure that it is well-positioned to continue investing in its technology development and growth initiatives, while also driving positive financial returns.

The company said, it "no longer expects to receive certain orders this quarter that had been expected to be received at the back end of the first quarter, and believes that its planned cost reduction initiatives will help better align the company's cost structure in light of these longer decision cycles."

For The First Quarter Ending March 27, 2015...

The company sees revenue in the range of $47 million - $50 million compared to the previously communicated target of $74 million. First quarter non-GAAP loss per share is expected to be in the range of $0.29 - $0.34 versus its prior outlook of non-GAAP earnings of $0.03 per share. GAAP loss is now expected to be in the range of $0.45 - $0.50 per share for the quarter.

For Full-Year 2015...

Revenue for 2015 is projected to be up to 25% below the midpoint of its previous annual guidance of $326 million - $330 million.

The company expects to continue to benefit from a strong balance sheet with at least $100 million in cash and marketable securities and no debt at the end of the first quarter.

Ray Dolan, President And Chief Executive Officer, Said:

"Sonus continues to benefit from strong business fundamentals that are underpinned by solid relationships with a growing number of tier one service providers around the world, leading technology and a strong balance sheet. These strengths, together with the positive feedback from current and prospective customers, give us confidence that we can move through this period and that Sonus has the right product portfolio and strategy to be the strategic supplier of choice to cloud-based network providers of the future."