More layoffs expected at Verint

Dan Bodner

The business intelligence company had 1,200 employees in Israel in 2014, 25% of its workforce.

What is going on at security, surveillance and business intelligence company Verint Systems Inc. (Nasdaq: VRNT)? After a prolonged period of increases in the company's share price, the trend reversed nine months ago, and the share has now lost 44% of its value since hitting a peak of over $66 in June 2015, compared with an 8.4% slide in the Nasdaq index. The company's current market cap is $2.3 billion, meaning that over $1.6 billion in market cap went up in smoke.

The drop in the share price follows the company's poor financial results in each quarter. At the same time, three months ago, the company carried out a wave of layoffs extending to dozens of employees in Israel. The company said at the time that the layoffs were "a very limited measure of cutting back on personnel only in individual activities," adding that the company was actually recruiting personnel for its other activities. "Like any other business entity, we must constantly make adjustments in order to provide a better response to developments and the changing needs of our market," Verint said at the time.

It is believed that the cutbacks at Verint will not stop there, and that Verint is still reducing its workforce at the present time, including in Israel. No response was available from the company. The company had 1,200 employees, a quarter of its workforce, in Israel in 2014.

Managed by CEO Dan Bodner, Verint supplies business intelligence and security systems and services. Up until several years ago, Verint was part of the Comverse Technology Group. When an accounting scandal was discovered at the parent company, managed by then-CEO Kobi Alexander, Verint was also affected, because it could not publish its financial statements on time, and its share was long traded on the Pink Sheets list in the US.

The share later returned to Nasdaq, and a little more than three years ago, in February 2013, the company was split off from Comverse Technology Group, thereby becoming an independent company with no controlling interest. The company's market cap at the time was $1.37 billion, and it then climbed to a peak of $4 billion in June 2015, while Comverse Technology Group was selling off its assets and falling in value.

Verint lowered its yearly revenue forecast

Bodner, who has managed Verint since 1994, received the maximum possible bonus in 2014 for meeting the targets, given the company's good results for that year. The cost of his salary was $9.6 million, including over $8 million in share-based remuneration. It is reasonable to assume where 2015 is concerned, things will be different.

Verint has disappointed investors time and again in recent quarters. Following the three quarterly reports published for 2015, the share price responded by falling. The company's most recent results for the third fiscal quarter on 2015 (ending on October 31, 2015) showed a 4% loss in revenue to $849 million. At the same time, Verint lowered its annual forecast, and expects to finish 2015 with $1.15-1.19 billion in revenue, compared with its previous forecast of $1.18-1.23 billion.

The company's revenue will still be 2-5.5% higher than in the preceding year. Its annual non-GAAP net profit will be around $3.30 per share, instead of the previously expected $3.45. In the coming weeks, the company is expected to publish its annual reports, and investors certainly hope that the share will finally begin its way back up.

Published by Globes [online], Israel business news - - on March 9, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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