Salomon Smith Barney says that if Comverse (Nasdaq: CMVT) loses its unified messaging contract with AT&T Wireless (AWE), this will not mean a significant revenue loss. It was reported in Israel yesterday that AT&T was likely to cancel this part of a contract with Comverse, announced in February this year, which also includes voicemail services. Salomon Smith Barney estimates that the voicemail part of the contract, which is not in doubt, is worth upwards of $40 million for Comverse, while the unified messaging portion of the contract “would not be even close to approaching that amount.”
“Indeed, we believe that CMVT’s entire unified messaging revenue base for the current fiscal year would probably be worth less than half the value of the AWE voicemail contract,” say Salomon Smith Barney’s analysts Victor Halpert and Robin Nazarzadeh, adding, “This reinforces our previously stated thesis that unified messaging is not going to be a large revenue generator for the company in the near term.”
Halpert and Nazarzadeh point out technical difficulties Comverse is experiencing with its unified messaging product, and say that the company “is in true jeopardy of losing the unified messaging business.” They believe Openwave is pitching its own unified messaging solution to AT&T Wireless.
The investment bank is raising its rating for Comverse to "Outperform, High Risk", but lowering its price target from $27 to $24. On Nasdaq yesterday, Comverse shares rose 2.84% to $18.10.
Published by Israel's Business Arena on 11 October, 2001