UF:
I'd like to nominate "Comverse Technology" (the phone company, not the shoe company) for the W and W portfolio. Although, it probably is a king already. It's market cap is around $18 billion. And, as far as I can tell, it's about 8 times as large as its nearest competitor. However, there doesn't seem to be any BTE, so Gorillahood is out. It does control about 70% of the global wireless messaging market. And it has the interesting characteristic of its stock being up for the year (+50.9)! And its up 33% over the last 100 days alone.
Acording to SSB its competitors, and their market cap, are
as follows:
Comverse Tech $17B
Acterna Innovation $2B
L-3 Comm $2B
MasTec, Inc. 1.4B
Clarent Corp .6B
and 10 others, all smaller.
Its return on equity is 31.2%, while Brooktrout Inc is 30%, Applied Innovation is 20.4% Mastec, Inc is 19.4% Nice-Systems ADR is 17.5%, Corsair Comm is 16.3%, L-3 is 13.3% and everyone else has a "Not Measurable" return.
Its forward P/E is about 68 according to SSB, but C/NET now lists it as 85. Its 52 week high is 123, and its low is 56. Its in the S&P. And I hold it, as do members of my family.
According to SSB:
"First Call Consensus EPS: 1/01E $1.43; 1/02E $1.70..."
"Comverse Technology (CMVT) reported 3Q results after market close on December 5, and beat numbers for the 26th straight quarter. The company hosted its first conference call ever, ....There was substantial depth to the discussion, and the business outlook was very positive from management's perspective. Revenues came in at a record $317.8 million Vs. our estimate of $305 million, and EPS reached $0.38 Vs. our estimate of $0.36. Gross and net margins improved to record levels of 62.57% and 21.52%, respectively. Earnings numbers exclude acquisition charges of $4.05 million for Exalink and Gaya Software. Revenues increased at a rate of 36% Y-o-Y, and 8.9% sequentially. It is important to note that the Y-o-Y revenue growth rate has increased since the beginning of the year, and reflects, in our opinion, CMVT's growing dominance in the enhanced services platform business. Also, backlog reached a record $293 million, and, as in the previous quarter, grew faster than sales.
Across business lines, the CNS division, driven by strong wireless business, contributed approximately 84% of revenues, while Comverse Infosys, a leading provider of voice and video logging equipment, contributed 12% of revenues....Indeed, driven by strong contact center and digital video logging business, Infosys chalked up impressive revenue growth of 32.5% and a sequential growth rate of 13.6%....CMVT's customer base grew to over 350 communication service providers, including 13 of the largest 20 such providers globally. Geographically, 30% of revenues were generated in the Americas, 45% in Europe, and 25% in Asia/Pacific and the rest of the world.
We believe that the continued growth in new services that CMVT has demonstrated over the past year validates our view that CMVT is extremely well positioned to be the premier provider of next-generation enhanced services to wireless operators. In fact, CMVT now boasts approximately 90 wireless data customers Vs. 80 in the previous quarter, approximately 50 prepaid wireless platform customers Vs. 45 in the previous quarter, and over 40 unified messaging customers Vs. under 40 in the previous quarter.
We believe that CMVT has achieved its impressive growth in new services by aggressively investing in R&D and technology based acquisitions to effect the development of innovative products.... new products include mobile e-mail, voice-based SMS, an upgrade to the voice-recognition platform Tel@go, mobile number portability, and a service to sample and purchase music via wireless phones. We expect to see continued growth in new services, and in wireless data, particularly. Management was upbeat about its router-based wireless Internet gateway product, which offers flexible architecture and interoperability with various protocols, including WAP and CHTML.
One of the main reasons that we like CMVT is that, strategically, it is positioned in one of the best areas of the wireless business. CMVT supplies revenue generating products to communication service providers who use those
products to increase traffic on their networks. Wireless subscribers, in return, pay service providers based on how much air-time or traffic they use on the network. The more traffic on the network, the more the service provider, and in turn CMVT, realize revenues. That is a primary reason why we do not believe CMVT will be necessarily sensitive to declining handset sales or declining capital expenditures by telecom equipment and service providers. That is also a primary reason why the company has excellent visibility. In fact, we believe that with wireless phones quickly becoming the vehicle for ubiquitous computing, CMVT, with its lineup of next generation enhanced services, is in a solid position to continue its excellent growth.
We like the fact that Comverse Infosys turned in a solid quarter. However, what we like even more is that during the quarter the division won a series of impressive contracts, signaling improved traction in its contact center business. During our conversations with Comverse Infosys' new customers, one of which is the largest distributor of contact center equipment in Brazil, we learned that in all cases Comverse Infosys' products were selected based on superior technology and interoperability with CRM applications.... With the industry and the contact center segment both experiencing rapid growth - 22% CAGR and 33% CAGR through 2001, respectively, innovative technology offerings will differentiate the winners from the losers.
We are raising our FY-ending January 2001 revenue and EPS estimates to $1.208 billion and $1.46, respectively. For FY-2002 we raise our revenue and EPS estimates to $1.505 billion and $1.77, and for FY-2003 we raise our revenue and EPS estimates to $1.875 billion and $2.12, respectively.
CMVT has exceeded all expectations in both revenues and EPS while growing its backlog to record levels for 26 straight quarters. The primary driver of growth continues to be the digital wireless market that CNS serves. CMVT has been aggressively developing next generation enhanced services platforms such as unified messaging, one touch call return, wireless data information services, and prepaid services. With the number of wireless subscribers expected to grow to 1.2 billion by 2003 from approximately 300 million in 1998, CMVT faces a fast growing market for such platforms. We believe that CMVT is a core telecom equipment holding services.... CMVT has customers in over 50 countries, with no single customer accounting for as much as 10% of quarterly revenues. Key customers include AT&T, Verizon, Deutsche Telekom, and NTT."
"CMVT is the industry leader in wireless messaging, and is emerging as a leader in wireless data. With approximately 70% of the global wireless messaging market, CMVT is the gatekeeper to the killer application of the wireless industry."
For what its worth, according to C/NET there are 11 Buy recommendations, no Hold or Sell recommendations and it rates 33rd in there rating system. For purposes of comparison, the top 25 companies in the system are as follows: NORTEL, ARIBA, JDSU, ITWO, BROADVISION, EXODUS, COMMERCE ONE, AKAMAI TECHNOLOGIES, VERISIGN, SPRINT CORP, PMC-SIERRA INC, ALLEGIANCE TELECOM, CISCO SYSTEMS, EMC CORP, E.PIPHANY INC, REDBACK NETWORKS, BEA SYSTEMS, JUNIPER NETWORKS, ART TECHNOLOGY GROUP INC, CHECK POINT SOFTWARE TECH, GLW CORNING, INKTOMI CORP, VERTICALNET, VERITAS SOFTWARE, and XILINX INC.
The following are all the recommendations listed over the last 30 days.
12/20/00 Salomon Smith Barney - Comverse Tech Maintained 'Outperform.'
12/19/00 William Blair - Comverse Technology Reiterated 'Strong Buy.'
12/19/00 US Bancorp Piper = Comverse Tech Reiterated 'Strong Buy.'
12/14/00 CSFB - Comverse Technology Reiterated 'Buy.'
12/8/00 Ladenburg - Comverse Tech Reiterated Near-Term 'Strong Buy.'
12/8/00 Noble Financial - Comverse Technology Reiterated 'Buy.'
12/7/00 Oscar Gruss - Comverse Technology Reiterated 'Buy.'
12/7/00 US Bancorp Piper - Comverse Tech Maintained 'Strong Buy.'
12/6/00 UBS Warburg - Comverse Tech Maintained 'Buy.'
12/6/00 Salomon Smith Barney - Comverse Tech Maintained 'Outperform.'
12/6/00 US Bancorp Piper - Comverse Technology Reiterated 'Strong Buy.'
12/6/00 CIBC - Comverse Technology Reiterated 'Strong Buy.'
12/6/00 Ladenburg = Comverse Technology Reiterated N-T 'Strong Buy.'
12/6/00 CE Unterberg Towbin - Comverse Technology Reiterated 'Buy.'
12/6/00 Chase H&Q - Comverse Technology Reiterated 'Strong Buy.'
12/4/00 CIBC - Comverse Technology Reiterated 'Strong Buy.'
- Fred |
