Despite a tough market, AudioCodes is doing well. For third quarter 2008, the company beat its own projections by two cents per share as revenues rose 15.3 percent year-over-year to a record $46.6 million. Its GAAP net income rose to $3.1 million and non-GAAP net income rose 72.3 percent year-over-year to $4.8 million. In addition, this year the company purchased more than four million shares of its stock.

 

AudioCodes (News - Alert) recently announced support for HD voice, which in my opinion is fantastic news. VoIP is like the Japanese auto industry. In the beginning people looked at Japanese cars as cheap vehicles but considered their quality to be substandard. In fact the term, "Japanese Junk" was a popular description of these autos. Over time, the quality of the cars improved to the point where Japanese cars are viewed as superior to vehicles made in virtually all other countries.

 

Similarly, when VoIP first came out, the bandwidth wasn't there to have the best possible quality. Processing power was also lacking. Fast forward a decade or more and VoIP quality is easily on par with the PSTN. Now, with HD voice and stereo, fantastic voice quality is on the horizon thanks to VoIP and companies like AudioCodes.

 

Will this news bode well for AudioCodes? My answer is absolutely. It may not add a tremendous amount to earnings overnight, though. What I do expect is slow and steady penetration; as word spreads about improved quality levels, companies will become more familiar with HD voice and start to request it.

 

About the beginning of 2004, the business world started to see VoIP as “telephony” and circuit switched equipment as “legacy.” In a few years, HD voice likely will become “telephony” and everything else “legacy.”

 

In addition, I suppose Microsoft and other companies will continue to market improved voice quality. To date, Polycom has been most aggressive in this area by building an HD voice global online community (GOC) on TMCnet to educate the world about the benefits of this technology. This branding is helping raise awareness and drive increased sales levels and this is good for the entire IP communications ecosystem and for those people who appreciate the better quality of higher fidelity phone calls.

For more on high fidelity voice communication and HD VOIP, be sure to join AudioCodes on November 18 for an exciting live Webinar, called “HD VoIP – The Next Sound Barrier?”