Carmel Vernia, a former number two at Comverse Technology Inc. (Pink Sheets: CMVT) has told "Globes" that he is greatly pained by the rapid deterioration of the company. Vernia said, "The first and immediate thing that needs to be done at Comverse is to change the management and the board of directors. If somebody fails then they simply need to be changed. When you have a cancer, first of all you need to take it out, and only then can you think about recovery."
Vernia served in a range of senior executive positions at Comverse from 1985-2000 before leaving to become Chief Scientist at the Ministry of Trade, Industry and Labor. He worked alongside Comverse's founder and then CEO Kobi Alexander.
The former Comverse number two is not the type to rush to the media to be interviewed. He said, "Ten years ago, I left a company that the employees were proud to work for. The managers were super dedicated and modest, and nobody flew business class including Kobi and me. We were very conservative from a financial point of view. All the time we were in a mood to raise capital and make offerings only when it was possible, and the main thing was that the company was financially healthy.
On Friday, Comverse announced that it was realizing assets and implementing cost cuts as its cash reserves dwindle. The company had cash reserves of $2 billion in 2007, which fell to $327 million in the second quarter of 2010.
Vernia said, "I never heard of wiping out such value. I've simply never heard anything like it. I say this out of pain. It hurts me to see such a crash. The present management is simply unable to fulfill their function. To wipe out almost $2 billion within four years requires special talent."
He continued, "Whoever heard of a project of reconstructing reports taking four years at a cost of $500 million. It is not like building a spacecraft or fighter aircraft. Just reports. True it's convenient for lawyers and accountants to carry on doing it forever, and they will probably succeed in doing so. The present management should be stopping it but where are they? They have to lay down the limits. For those $500 million they could have employed 1,000 engineers. Where could the company have been today if that money was invested and not in covering backsides? The directors earn hundreds of thousands of dollars a year. Where is the personal example? It's not the company that I left. It hurts my heart."
Vernia was very close to Alexander who fled from the US authorities to Namibia following the backdating affair.
He said, "You can come to Kobi with all types of claims about the damage he did to investors. But what damage are the present management doing? The investors will yet miss Kobi, even if he did do what they say he did, they still made a lot of money on the back of him. And look where the company is now."
A spokesman for Comverse said that Vernia's comments are not worthy of a response.
In morning trading in New York today, Comverse share price recovered some of last week's losses climbing 5.1% to $5.15.
Published by Globes, Israel business news - www.globes-online.com - on August 16, 2010
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