some excerpts from tim luke's (lehman bros) write-up following the "10 uncommon values" recommendation which i don't believe have been cited previously on our fair board.
-----
Following excellent 1Q98 results which beat expectations, Comverse is likely to deliver strong 2Q98 earnings which may exceed our estimates and confirm record backlog levels with excellent visibility for 3Q98.
Targeting High Growth Enhanced Services Market
In addition to the rapidly growing market targeting wireless operators, the wireline market offers substantial opportunities with penetration levels currently at less than 15% in the US and less than 5% in international markets.
Global Industry Leader, Gaining Market Share
Comverse currently services 13 of the world's 20 largest phone companies, and we estimate the combined company has 40-45% of the global enhanced services market. We estimate that Lucent/Octel has approximately 20-25% of the market with Unisys holding around 20% and smaller players such as Centigram and Glenayre making up the balance. Comverse has aggressively expanded its market share in recent years and opportunities may exist to extend its leadership ahead of the rollout of Lucent/Octel's long awaited new IMA platform now scheduled for release later in 1998.
Potential To Add New Account Wins In 1998, New Services
Comverse appears well placed to win business from several of the new wireless operators in Brazil, notably from the Bell South consortium in Sao Paulo. Orders from Brazil as well as strong sales prospects in Mexico with new PCS players could provide significant revenue and earnings upside in 1998 and 1999.
Strong Momentum In US & Europe, Offsetting Slower Growth In Asia
Comverse recently received a major mandate for $90 million from Bell South. In the US wireless market the company is seeing bouyant sales to several new PCS operators including Sprint PCS, Bell South PCS and Powertel. In Europe, Comverse is benefiting from extremely robust sales trends to a number of core customers including Deutsche Telecom and Dl in Germany and Omnitel and Telecom Italia in Italy as well as wireless operator SFR in France.
Investment Risks, Monitoring Asia & Competitive Landscape, Managing An International Merger
In managing a large merger, we are encouraged that the new company will continue to support both Comverse's Trilogue recording platform and Boston's CO Access and Access NP platforms with a new unified platform likely to emerge in late 1999.
lehman.com |
