More Sales Lead to Record Revenue at ACT Networks

In 1993, when ACT Networks Inc. introduced a line of voice-over frame relay products, their complexity scared off many potential large clients, said Martin Shum, chairman and chief executive of the Camarillo-based operation.

But these large companies have not only adjusted to the system, they seem to have embraced it.

Increased sales of the products, which transmit voice and data information on the same computer circuit, played a major role in ACT Network’s record revenue of $11.9 million for the second quarter of fiscal 1997, ended Dec. 31, a 93% increase from the $6.2 million for the same period a year earlier.

For the six-month period ended Dec. 31, ACT Network revenues climbed 96%, from $11.3 million in fiscal 1996, to $22.1 million in fiscal 1997. Net income for the period increased from a loss of $6.9 million to a profit of $2.4 million.

ACT Network develops and manufactures network access products for a wide range of voice, data and integrated network uses.

“Voice-over frame relay is going very up-market. We are dealing with larger and larger companies,” Shum said. “They are looking at applying this technique to connect their different locations together.”

Relay systems are a change from the older switch-based system, through which only voice or data is transmitted at any one time.

“People now understand the application of the relay system technique,” Shum said. “It’s not magic anymore. It’s just a good application.”

In addition to increased voice-over sales, Shum said the company has benefited from overall growth both domestically and abroad.

Sales in the United States increased 38% from the first quarter of fiscal 1997 to the second quarter, and foreign sales increased 24% in Latin America and 27% in Asia during that period.

ACT Network has increased its presence in both Latin America and Asia in large part due to the introduction in early 1996 of its satellite network system, SkyFrame.

“It was designed for countries where they do not have an extensive telecommunications infrastructure, like Brazil, Indonesia and Chile,” Shum said. “The whole idea is to provide frame relay solutions to developing countries so they can keep up the pace with the rest of us.”

ACT Network expects further growth in Latin America as a result of an agreement signed late last year under which it would provide supplies to Telefonica Sistemas de Satelites, the national telephone and telecommunications company of Spain.

Telefonica over the past 10 years has purchased large shares of a number of smaller telephone companies in the region.

“They act as a satellite integrator for a lot of them,” Shum said. “This could be a very good partnership for us because of their presence in Latin America. We are hoping to get to play a role in the infrastructure.”