Avici Systems Inc. soars on Q2 results, revenue guidance
Shares of Avici Systems Inc. (Nasdaq: AVCI) continue to skyrocket after the high-speed core Internet infrastructure equipment provider laid out its business for future revenue streams on a conference call this morning. The call followed the release of higher-than-expected results for the second quarter ended June 30, as well as increased revenue guidance.
On the conference call, Avici Systems’ management laid out the company’s product strategy for its latest product, Soapstone Networks. Company officials specifically said that Avici Systems’ strategy going forward has been shaped by several industry trends.
These trends include the transformation of carrier networks along next generation network (NGN) software frameworks and carrier recognition that today’s networks need significant reduction in complexity and expense.
On the call, Avici Systems’ CEO Bill Leighton said that he believes that automated frameworks should herald construction of new services and bolster top lines.
“Carriers recognize that today’s networks require significant reduction in complexity and expense,” Leighton said.
Avici Systems’ Soapstone network will allow carriers to convert services onto a technology independent automated infrastructure that leverages new NGN software framework in combination with new transport technology like carrier Ethernet and eventually less expensive integrated optical Ethernet.
Avici Systems says a disconnect exists between frameworks and transport solutions. NGN software networks are currently addressing the automation while carrier Ethernet addresses the cost and complexity.
Avici Systems’ management said it is seeking to bridge that gap between the transport network and the services plane through its Soapstone solution. Soapstone’s control plane has implemented a vital component for that new architecture, the company said.
Avivi Systems anticipates revenue from Soapstone will be minimal in 2007, but should ramp up in 2008.
For the three months ended June 30, the North Billerica, Mass.-company recorded net income of $12.7 million, or $0.86 per share, compared with $8.5 million, or $0.62 per share in the second quarter of 2006. One analyst surveyed by Thomson Financial expected earnings of $0.21 per share for the second quarter.
The small-cap company also raised revenue guidance for the full year to between $110 million and $125 million, from previous guidance of $50 million to $60 million. Specifically, Avici Systems raised guidance based on final orders received for its router products, which include network expansion and customer last time purchases.
On the call, management said it expects gross margin percentages in the low 70s for the remainder of the year.
Shares of Avici Systems soared 37.15%, or $3.13, to $11.54 Thursday afternoon.
