CMVT article in today's NEWSDAY, Business section, p. A 71.
newsday.com
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Battling for Market Cap Top Spot Comverse rivals CA for value on LI
by James Bernstein
Staff Writer
A year ago today, shares of Comverse Technology Inc. sold for about $57. With the exception of the technology selloff last spring, they have soared since, closing yesterday at $115.81.
Its rocketing stock price has placed Comverse, a Woodbury-based telecommunications equipment company, as a financial rival-in at least one category-with a technology cousin down the road, Computer Associates International, the software giant in Islandia.
Based on at least one measure of Wall Street's arcane nomenclature-market capitalization-CA and Comverse are neck-and-neck these days as the Long Island public company with the most value.
For the uninitiated, market cap is the value of a company's outstanding shares multiplied by the current stock price.
Computer Associates is larger in many of the ways that count-revenues, earnings, and employees, than Comverse. CA is also far-better known, and has become a leader in Long Island's growing technology industry.
During the past year, Comverse's market cap has been rising because it is in the hottest of hot markets. Demand for its wireless and telecommunications software has been explosive, analysts say. On the other hand, CA's market cap has been falling. The company has seen less demand for software to run large computer systems, which caused its stock price to plummet.
Comverse first caught up with CA in market cap on July 20, when the telecommunication's company posted a "worth" of $16 billion, compared to about $14 billion for CA. For much of October, the two companies traded market cap leadership. At the start of trading yesterday, Comverse was ahead, 19.3 billion to 19.0 billion. By the end of trading, CA, which gained 3.9 percent on the day, reclaimed the top spot.
How did all this happen? "In contrast to Computer Associates, [Comverse] has been continually profitable," said Donald Newman, an analyst for Ladenburg Thalmann in New York.
Analysts and Comverse executives said Comverse's rise is can be attributed to two prime factors: the popularity of its technology, and its financial performance over the past decade. "We are the leader in a very rapidly growing, large market," said Paul Baker, a Comverse vice president and spokesman.
Specifically, Comverse designs and manufacturers software that telecommunication carriers use to provide features such as voice mail and message notification. Comverse's software is used by banks, companies, and police organizations. The company has about 5,000 employes, nearly 50 percent of them in a suburb of Tel Aviv, Israel, the home country of Comverse chairman Kobi Alexander.
Comverse's success, said Douglas Ashton, who follows the company for Bear, Stearns in Boston, "is based on a very simple application: voice mail. Nobody realized the power of voice mail, just like nobody realized the power of e-mail." Additionally, analysts said, Comeverse has performed financially. "They've met or beat analysts expectations every quarter for the past six years," said Herbert Tinger, an analyst for C.E. Unterberg, Towbin, in Manhattan. "Investors like consistency. They like to put their money in a stock like this." Does having so many of its employees in Israel, a place often faced with violent clashes, present Comverse with problems? Baker said no.
"There's been not the slightest disruption," he said. "We've had lost days here on Long Island because of snowstorms, hurricanes and other things. But we've never lost a day in Israel, and that includes the Persian Gulf War." |
