- The Washington Times - Monday, April 4, 2005

The future for Opnet Technologies looks bright since Cisco Systems recently agreed to distribute the Bethesda company’s products.

Opnet makes network management software that helps organizations design and operate their computer systems more efficiently.

Last month, the company announced that Cisco, the world’s largest computer network equipment manufacturer, would distribute a variety of its software products.

Opnet’s stock jumped 24 percent March 16 — the day after the Cisco deal was announced — to $8.84 a share. The stock, OPNT, closed at $7.65 a share yesterday on the Nasdaq Stock Market, down 7 cents, or 0.91 percent, from Friday’s close.

The deal created Opnet’s first and biggest opportunity to have another company distribute its products.

Cisco also agreed to cooperate in developing new products with Opnet, which was founded in 1986.

The Bethesda company’s products include IT Guru, software to troubleshoot and predict the performance of computer networks and applications. It is used by large and medium corporations as well as government agencies, such as the military.

“Our products will bring advanced analytics to Cisco’s customer base, allowing them to solve and prevent problems faster and at lower cost,” said Marc Cohen, Opnet’s chief executive officer.

Computer industry analysts said the deal with Cisco is good news for the company, but only if it can overcome sales and marketing obstacles.

“There’s a lot of confusion from the customer standpoint,” said Richard Sherman, stock analyst for Janney Montgomery Scott LLC, a Philadelphia financial services firm.

Although Opnet’s products are good, few organizations understand how buying them could help them save or earn more money, he said.

“I think they need to deliver a clearer message about how they work with partners and how their product fits,” Mr. Sherman said.

Nevertheless, he said Opnet’s continuing growth would make the company ripe for a buyout or consolidation within two to three years.

The company reported net income of $5.7 million on revenue of $56.4 million for fiscal 2003, which ended March 31, 2004. It has not reported fiscal 2004 results.

A year earlier, it reported $2.7 million in net profit on revenue of $46.4 million.

Gary Spivak, an analyst for the Stanford Group financial firm, said Opnet’s sales are limited by the small niche that it seeks by selling network-management software to large organizations.

“The products frequently fall into the category of ‘nice to have’ rather than ‘need to have,’ which sometimes could affect their selling consistency,” Mr. Spivak said.

The Cisco deal could provide the big break the company needs, he said.

“Obviously that was a very positive announcement,” Mr. Spivak said. “It puts a small company like Opnet more on Cisco’s radar screen.”

Opnet officials attribute any challenges they face to short-term growth issues as they adjust their product line.

“We believe that the best way to grow our business is not to rely on any one specific strategy,” said Todd Kaloudis, vice president of marketing. “If one thing doesn’t work, we want to have some backup plan.”

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