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Technology Stocks : Comverse Technology -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Miller who wrote (805)	8/5/1999 9:45:00 AM
From: NotNeiderhoffer	Read Replies (1) \| Respond to of 1331

Kid, Can I help you with something son? NotyourdaddyNeiderhoffer

To: Daniel Miller who wrote (805)	9/8/1999 11:31:00 AM
From: Beltropolis Boy	Read Replies (1) \| Respond to of 1331

here you go, kid. ----- Stock of the Day Sep 08, 1999 Comverse Technology: Not the Sneaker Company, But Still an All-Star by Garrett Bekker You'd think investors in Comverse Technology (NASDAQ:CMVT) would have caught on by now. Last week its shares gained 17%, including 4% on Friday alone after the company posted yet another positive earnings surprise. Hard to believe, given that Comverse has now beaten earnings expectations in each of the last 20 - count 'em -20 quarters! Over the last five quarters, the average surprise has been 6.23%, according to I/B/E/S. Still, since last October, the stock has swelled about 4 « times. The key to its success: Comverse is the world's number one provider of messaging and information systems for telecommunications companies, both wireline and wireless. In the second fiscal quarter, which ended in July, sales of the company's services totaled $209 million, a 25% year-over-year increase. Diluted earnings per share came in at $0.52, up 55% from a year ago and 21.2% sequentially. Analysts were expecting Comverse to earn $0.49. That's what happens when both gross and operating margins grow for the fifth consecutive quarter. The gross margin improved to 62.2% from 61.4% in the prior quarter, while the operating margin increased a full percentage point to 19.5%. Where does Comverse go from here? Forecasts call for continued strong demand for Comverse's products, which include Comverse Network Systems and the Infosys Division. Comverse Network Systems provides enhanced service platforms for telecommunications operators. Infosys markets digital multimedia recording and monitoring systems that can be used as a quality assurance tool for call centers and financial institutions. Furthermore, value-added services such as unified messaging (voice, fax, and e-mail in a single mailbox), prepaid wireless services, short text messaging, one-touch call return, to name a few, should continue to boost margins. Analysts Elan Zivotofsky and John Kiang of Goldman Sachs estimate that such services currently account for just 10% of sales, which the company can then sell to its base of 300-plus global networking customers and increase profits-per-customer. As evidence of its commitment to expanding its portfolio of value-added telecommunications services, Comverse acquired InTouch Systems in early August in an all-stock transaction. InTouch's InFlection product is a speech-recognition product that will allow wireless callers to use voice commands to check e-mail and voice mail, address books and calendars and surf the Web. The Infosys division recently launched Words&Pictures, a plug-and-play Windows-based quality monitoring solution targeted toward small and mid-sized call centers. Words&Pictures provides an automated means to evaluate and coach agents using both voice and screen recording. An interactive computer-based training tool is provided with step-by-step instructions to help the new users understand the system. Visibility for further earnings surprises is crystal clear given its backlog of $191 million, up 8.5% from $176 million at the end of the first quarter, in comparison to sales growth of 5%. Add to that the better-than-expected results, and-voila--analysts are busy raising their estimates again. In fact, more than half of the analysts following the company raised their projections for the third quarter, which currently calls for earnings per share of $0.53. For the fiscal year ended January 2000, the current consensus is for Comverse to earn $2.07; it is expected to grow nearly 20% to $2.48 in fiscal 2001. Based on these projections, at $92 the stock is currently trading at 37 times the consensus estimate for the year ending January 2001, a premium of 85% to its expected growth rate. However, a number of analysts believe that a premium multiple is warranted, given the company's exceptional visibility and history of stable revenue and earnings generation. Furthermore, the company has a dominant market position, with over 40% share and no clear competitors in sight. Comverse also sports a pristine balance sheet, with a cash position of $713 million and rising, and a current ratio over 4. Bottom Line: With a mammoth backlog of nearly $200 million, Comverse is on track to continue its eye-popping string of over five years of upside earnings surprises. Investors searching for a technology play with a strong track record of stable revenue and earnings growth should take a long look at Comverse Technology. fnews.yahoo.com