1130258--3/16/2007--ACME_PACKET

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{customer, product, revenue}

{stock, price, operating}

{system, service, information}

{stock, price, share}

{control, financial, internal}

{property, intellectual, protect}

{operation, international, foreign}

{product, liability, claim}

{acquisition, growth, future}

{cost, regulation, environmental}

{provision, law, control}

{personnel, key, retain}

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Risks Relating to Our Business If the market for SBCs does not develop as we anticipate, our revenue may decline or fail to grow, which would adversely affect our operating results. We have incurred operating losses in the past and may not be able to sustain profitability in the future. The unpredictability of our quarterly results may adversely affect the trading price of our common stock. We depend on a limited number of customers for a substantial portion of our revenue in any fiscal period, and the loss of, or a significant shortfall in orders from, key customers could significantly reduce our revenue. Our revenue growth may be constrained by our product concentration and lack of revenue diversification. The long and variable sales and deployment cycles for our products may cause our operating results to vary materially, which could result in a significant unexpected revenue shortfall in any given quarter. Our revenue growth will be limited if we are unable to continue to sell our products to large interactive communications service providers. Our large customers have substantial negotiating leverage, which may require that we agree to terms and conditions that could result in increased cost of sales and decreased revenues and could adversely affect our operating results. Future interpretations of existing accounting standards could adversely affect our operating results. If the migration to an IP network architecture for real-time interactive communications does not continue, the SBC market may not expand as predicted, and our ability to obtain new customers may decrease and our revenue will decrease. If functionality similar to that offered by our SBCs is added to existing network infrastructure elements, organizations may decide against adding our SBCs to their network which would cause the market for standalone SBC systems to decrease resulting in fewer customers for and decreased sales of standalone SBC systems. The market for SBCs is competitive and continually evolving, and if we are not able to compete effectively, we may not be able to continue to expand our business as expected and our business may suffer. If we do not timely deliver new and enhanced products that respond to customer requirements and technological changes, interactive communications service providers may not buy our products and our revenue may decline. If our products do not interoperate with our customers existing networks, the demand for our products will decrease and our operating results will be harmed. We rely on many distribution partners to assist in selling our products, and if we do not develop and manage these relationships effectively, our ability to generate revenue and control expenses will be adversely affected. Our international operations expose us to additional business risks, and failure to manage these risks may adversely affect our revenue generated in foreign countries, and our overall operating results. Because we derive all of our revenue from interactive communications service providers, our operating results will suffer if the interactive communications industry experiences an economic downturn. The loss of key personnel or an inability to attract and retain additional personnel may impair our ability to grow our business. We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to public company compliance initiatives. If we are unable to absorb these increased costs or maintain management focus on development and sales of our product offerings and services, we may not be able to achieve our business plan. If we are unable to manage our growth and expand our operations successfully, our business and operating results will be harmed and our reputation may be damaged. Our ability to compete and the success of our business could be jeopardized if we are unable to protect our intellectual property adequately. Claims by other parties that we infringe upon their proprietary technology could force us to redesign our products or to incur significant costs. Compliance with regulations and standards applicable to our products may be time consuming, difficult and costly, and if we fail to comply, our product sales will decrease. Regulations affecting IP networks could reduce demand for our products. We are subject to environmental and occupational health and safety regulations that may increase our costs of operations or limit our activities. Because our products are sophisticated and designed to be deployed in complex environments, they may have errors or defects that we find only after deployment, which could result in a loss of customers and adversely affect our reputation, future sales and operating results. Our dependence on outside contractors for critical manufacturing services could result in product delivery delays, damage our customer relations and adversely affect our operating results. Certain component parts used in the manufacture of our products are sourced from single or limited sources. If our contract manufacturers are unable to obtain these components on a timely basis, we will not be able to meet our customers product delivery requirements, which could harm our reputation and adversely affect our operating results. Product liability claims related to our customers networks could result in substantial costs. We may undertake acquisitions to further expand our business, which may pose risks to our business and dilute the ownership of our existing stockholders. We may need additional capital in the future, which may not be available to us, and if it is available, may dilute your ownership of our common stock. Risks Relating Ownership of Our Common Stock The price of our common stock may be volatile. If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline. Future sales of our common stock by existing stockholders could cause our stock price to decline. Insiders continue to have substantial control over Acme Packet and could delay or prevent a change in corporate control. Our corporate documents and Delaware law will make a takeover of our company more difficult, which may limit the market price of our common stock. If our earlier involvement in and hyperlinking to four articles previously posted on our website, or any other publicity regarding our company or our initial public offering during the waiting period associated with the offering were held to violate Section 5 of the Securities Act, we could be required to repurchase shares sold in the initial

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1130258--3/16/2007--ACME_PACKET_INC