Comverse Technology Inc. (Pink Sheets: CMVT) US network services software subsidiary Ulticom Inc. (Pink Sheets: ULCM) announced on Friday that it will pay a special cash dividend, and that it expects to publish its revised financial reports by October 31, 2009.
An announcement by Comverse subsidiaries that they will finally publish revised financial reports will be considered a good omen that Comverse will shortly follow suit. Comverse and its subsidiaries have not published quarterly or annual financial reports for three years, since the eruption of the stock options backdating scandal.
The announcement of the special cash dividend sent Ulticom's share up 11.8% on Friday to $6.15, and sent Comverse's share up 7.4% to $6.50. The share of Comverse's other subsidiary, analytic security and business intelligence software developer Verint Systems Inc. (Pink Sheets: VRNT), skyrocketed by 39.9% to $4.80, after RBC Capital Markets analyst Daniel Meron raised his recommendation for the company to "Market Outperform" from "Market Perform", and set a target price of $16, quadruple Friday's opening price. Trading volumes in all three shares was well above their daily averages.
Ulticom said that it will distribute a special cash dividend of $4.58 per share, amounting to over $200 million, on April 20, based on shareholders' holdings on April 13. The company stated that it had $281 million in cash and cash equivalents at the end of February. According to the last financial report, published in 2005, it had $246 million in cash.
Comverse owns 69% of Ulticom, and will therefore receive $139 million from the subsidiary's dividend. Meron estimates the net capital gain at $100-120 million. "The dividend may help simplify the group's balance sheet, provide liquidity at the group level and improve Comverse's financial flexibility in case subsidiaries like Verint need a shield from the heavy debt burden."
Published by Globes [online], Israel business news - www.globes-online.com - on April 5, 2009
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