Starent Swings to 4Q Profit on Customers

Shares of the company, which provides hardware and software that lets mobile carriers offer customers multimedia services, rose $3.70, or 29.9 percent, to $16.06 in late afternoon trading.

For the quarter ended Dec. 31, 2007, Starent reported profit of $4.2 million, or 6 cents per share, compared with a loss of $1.2 million, or 44 cents per share, in the year-earlier period.

Excluding one-time charges, including stock-based compensation expenses, income was $8.4 million, or 11 cents per share.

Revenue more than doubled to $50.6 million from $24.3 million.

Analysts polled by Thomson Financial expected, on average, profit of 3 cents per share on revenue of $43.1 million. Analysts typically exclude one-time charges.

For the fiscal year, Starent posted profit of $11.5 million, or 12 cents per share, on revenue of $145.8 million. Excluding certain charges, full-year profit was $24.2 million or 37 cents per share.

The company cited two new customers, Mexico's Iusacell and Leap Wireless International Inc.'s Cricket Communications, as key developments in the quarter. Also, Starent said it improved its universal mobile telecommunications system and clarified issues surrounding WiMax promotion and development with Taiwan's government.

Lehman Brothers analyst Jeffrey Kvaal attributed the jump in profit to strong growth at Verizon Communications Inc. and Sprint Nextel Corp., and kept his "Overweight" rating and $24 price target.

Yet despite the strong growth, Kvaal said that higher operating expenses, especially in sales and marketing, held back earnings.