Ixia poised for growth but hampered by problems at the top
If delivering products was all there was to running a tech company, Ixia of Calabasas would be in good shape.
Founded in 1997, Ixia began as a provider of high-speed data network systems — extremely fast information pipelines — for well-known tech companies such as Cisco Systems Inc. and Broadcom.
Today, Ixia is a leading maker of communications equipment that monitors and verifies the performance of a broad range of data-transmission gear. Ixia offers products that generate, receive and analyze high-speed data traffic to ensure that networks are operating efficiently.
Ixia is benefiting as customers and carriers demand ever-increasing amounts of speed and reliability over the Internet, analysts say.
James Kisner, an equity analyst with Jefferies, said in a recent note to investors that Ixia was “well-positioned for strong profitability.”
Ixia’s management declined to be interviewed.
The latest
Ixia has suffered lately because of problems at the top, not in the trenches where its products are developed and made.
In June, company executives met with Nasdaq stock exchange officials to plead the case against being delisted for failing to meet the crucial requirement of timely quarterly earnings reports. Ixia hasn’t released an earnings report since the third quarter of 2013.
The Nasdaq hasn’t released a determination on the matter.
Through the first nine months of 2013, Ixia reported revenue of $269.7 million, up from $232 million a year earlier. The company posted net income of $17.8 million, down from $41.8 million a year earlier, primarily because of higher expenses and taxes.
Accomplishments
Ixia products impress analysts, technology industry publications and trade show administrators.
One of Ixia’s products, dubbed Perfect Storm, was recently selected as the grand prix winner of the Interop Tokyo 2014 trade show.
In 2013, Ixia ranked 14th on Forbes’ list of the 25 fastest-growing tech companies.
Challenges
In addition to its problems releasing financial results on time, the company lacks a permanent chief executive.
The previous holder of that post, Victor Alston, resigned in October under embarrassing circumstances. Ixia filings with the Securities and Exchange Commission said that Alston had “misstated his academic credentials, incorrectly claiming to have received a B.S. and a M.S. in Computer Science” from Stanford University, “and had misstated his age and early employment history.”
Moreover, Ixia reported in April that it intended to reissue earnings results for two quarters in 2013 because of “accounting errors” that it expected to “reduce revenue by about $2 million and $4.5 million for the quarters ended March 31, 2013 and June 30, 2013, respectively.”
Analysts
Analysts appear to believe Ixia’s problems can be fixed. Of the five analysts that regularly cover the company, one has it rated as a strong buy. Another rates it a buy. Three others suggest holding the stock.
One reason for the optimism is that a co-founder and former chief executive, Errol Ginsberg, 58, who held the CEO title from 2000 to ‘08, stepped into the acting chief executive spot.
Kisner, the analyst, said that an internal audit found no evidence that Alston had “engaged in intentional misconduct with respect to the company’s financial results,” and added that only a “minor restatement” of earnings results would be required.
Twitter: @RonWLATimes
