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

To: Mark Ambrose who wrote (446)	5/29/1998 5:08:00 PM
From: Mark Ambrose	Read Replies (1) \| Respond to of 1331

Stock Talk's Company Research/Analysis of Comverse. pivot.net --------------------------------------------------------------------- (CMVT) Comverse Technology Inc. Comverse Technology is a New York Corporation that designs, develops and manufactures computer and telecommunication systems and software for multimedia communications and information processing applications. These systems are used in a wide range of businesses including both fixed and wireless telephone network operators. Additionally, they sell to government agencies, financial institutions, call centers and other public and commercial organizations throughout the world. Comverse has three primary product lines: the Trilogue which is the product line that allows wireless and wireline telecommunication networks to offer revenue-generating services (like voice messaging used on cellular phones); the Audiodisk which is a product that enables monitoring, surveillance and recording as well as other information gathering for law enforcement agencies as well as other intelligence groups; the Ultra Series which allows for the recording of digital information supporting voice/fax/data recording for call centers, financial institutions, air traffic control centers and emergency 911 operators. Trilogue accounts for 72% of their business while Audiodisk and Ultra systems account for 28% combined. The company's primary revenue is from a subscriber base. The bulk of their customers provide services to the public in the telecommunication field. CMTV bills themselves as the market leader in providing large capacity messaging systems for international telephone network operators. Comverse appears to be an undervalued company that is part of a sector that has great prospects, the wire and wireless communication field. The company numbers look like this: 5 year average growth rate of 30% with a 5 year average PE of 27.1, ROE=17.5, Net Margins=14, LTD/CAP=32, Revenue after their acquisition of Boston Technology=+-400million with a Market Cap of 1.7billion. Comverse reported earnings on 2/18/98 of .44, .02 ahead of First Call's earnings estimate. The stock had been bid up 8% in the day prior to earnings, anticipating good earnings. After the earnings report, the stock sold off a point or two at which point we bought. It was the typical buy on rumor, sell on news scenario. In August 1997, Comverse Technology agreed to acquire Boston Technology in a stock purchase believed to be accretive to earnings immediately. Boston Technology's customer base in Brazil and Japan with wireline network operators compliments Comverse's current business in other regions. Boston Technology also has voice mail and voice answering systems for cellular and local phone companies as well as for business. Boston Tech. does do some business in Japan and it appears that the stock has sold off in recent times to discount for potential weakness in Japan in months to come. The new Comverse (including Boston Tech.) has essentially no competition and it seems unlikely to me that Japanese phone companies will discontinue their service and replace their technology with humans. The company has a 52 week high of almost 55 dollars with a relative strength of 35, an earnings per share rank of 93 and an accumulation rank of B. It has just started to be accumulated again by mutual funds who sold off in panic late last year. Mutual funds currently own about 40% of the outstanding shares. This is a stock that we see fairly priced back in the 55-60 range and could easily run up to $70 (almost double) inside of twelve months. < snipped >