Acme Packet Shares Plummeted: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of communications equipment maker Acme Packet (NAS: APKT) plunged 17% Friday after its quarterly results came in below Wall Street expectations.

So what: While Acme's third-quarter profit didn't miss by much ($0.21 per share versus the consensus of $0.22), a disappointing top line ($70.6 million versus estimates of $74.6 million) is prompting investors to continue lowering their growth expectations. In fact, the stock is hitting a new 52-week low on the news and is down a whopping 60% over the past six months.

Now what: Mr. Market seems to be overreacting a tad. The quarter wasn't great, but management did reaffirm its full-year outlook, suggesting that the short term isn't as horrific as today's near-20% sell-off suggests. And while gorillas Cisco (NAS: CSCO) and Juniper (NYS: JNPR) have done a nice job in integrating SBC (session border controller) functionality into their routers, Acme continues to be the big dog in the space with more than 60% of the market. In other words, Acme's big picture still looks decent.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Cisco. Motley Fool newsletter services have recommended buying shares of Cisco. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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