BSS (inc. billing, revenue assurance)

Comverse in Play

1:35 PM -- One of the telecom sector's largest Service Provider Information Technology (SPIT) vendors, Comverse Inc. (Nasdaq: CNSI), appears to be up for grabs again now that its parent company, Comverse Technology Inc. (Nasdaq: CMVT) (CTI), has sorted out its books, relisted on the Nasdaq and started offloading its assets. (See Ulticom Agrees $90M Sale.)

The billing/charging systems vendor, which also develops value-added services (VAS) for service providers, spent years in the wilderness following the financial shenanigans of former chairman Jacob "Kobi" Alexander. (See Comverse Kobi Coughs Up $54M and Light Reading's Hall of Fame: The First Five.)

Now, though, its well-regarded products, staff and customer base are attracting suitors (as expected), with Amdocs Ltd. (NYSE: DOX) and Oracle Corp. (Nasdaq: ORCL) the two main names in the frame, according to Ynetnews, which cites valuations ranging between $750 million and $1 billion.

Comverse has been shrinking in recent years, in large part due to the uncertainty surrounding its future, but is still among the largest suppliers of back-office support and service creation software to communications service providers.

In the three months to the end of July 2011, Comverse generated revenues of US$182 million (down nearly 18 percent year-on-year) and operating income of $9.6 million, citing (in its SEC filing) increasing demand for its Comverse ONE product. (See Comverse Wins Channel Islands SPIT Deal, Cell C Picks Comverse's BSS and C&W's LIME Uses Comverse SPIT.)

It seems inevitable that CTI will broker a deal and Comverse will find a new home. I wonder, though, if Amdocs and Oracle might find some competition for the Israeli company's well-entrenched assets and cash flow. HP, IBM and even Huawei Technologies Co. Ltd. have been linked to Comverse before now and, given recent maneuverings in the SPIT sector, it wouldn't be a major shock if Ericsson AB (Nasdaq: ERIC) or even (at a stretch) Microsoft Corp. (Nasdaq: MSFT) were mentioned in dispatches. (See Ericsson Signals New M&A Era, Ericsson to Buy Telcordia and The Other Microsoft.)

— Ray Le Maistre, International Managing Editor, Light Reading

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