CIBC: Actimize acquisition opens new opportunities for NICE

(Israel Business Arena Via Thomson Dialog NewsEdge) CIBC World Markets says that the acquisition of Actimize Ltd. opens new growth opportunities for NICE Systems (News - Alert) Ltd. (Nasdaq: NICE; TASE: NICE). CIBC reiterated its Sector Outperformer recommendation for NICE with a target price of $43.

CIBC says, We see significant synergies between Actimize's anti-fraud/anti-money laundering analytics software and NICE's call center solutions. In time, we believe the combo could catalyze significant growth, helping NICE penetrate deeper into the enterprise and helping Actimize sell into contact centers. We expect a smooth, surprise-free integration. The two companies already know one another at many levels and have recently presented a proposed joint offering to shared customers. Actimize's management team will remain intact, as will its R&D division, located around the corner from NICE in Israel.

The companies' joint marketing and channel efforts will initially focus on the financial services sector, Actimize's sole and NICE's largest market. A converged NICE/Actimize analytics product for the vertical is expected in 2008. A solution tailored to the security market is likely to follow.

Actimize is on track to grow over 50% in 2007; management expects it to grow 40%-50% to $55-$60 million, in 2008. Though Actimize is profitable, the $280 million price tag ($227 million in cash) will cut into NICE's interest income, for $0.04-0.05 dilution in our 2007 estimate. The deal should be neutral in 2008.

CIBC notes, NICE expects Actimize to contribute $10-$12 million in revenue during the fourth quarter of 2007 and to be $0.04-$0.05 dilutive to EPS during that period because of lower interest income. As a result, NICE is raising its 2007 fiscal year revenue guidance to $497-$514 million from $487-$502 million and lowering EPS guidance to $1.31-$1.42 from $1.36-$1.46.

CIBC has raised its forecasts for NICE as a result of the acquisition: Our new estimates assume the Actimize acquisition will close toward the end of the third quarter of 2007. We are raising our fourth quarter of 2007 revenue estimate to $142 million from $132 million and trimming our EPS target to $0.39 from $0.44. Our fiscal year 2007 revenue estimate is raised to $509 million from $499 million, with EPS trimmed to $1.40 estimate from $1.45 estimate. We are raising our fiscal year 2008 revenue estimate to $617 million from $562 million and keeping our EPS target unchanged at $1.70.

Published by Globes [online], Israel business news - www.globes.co.il - on July 3, 2007

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