Comverse reports it will lay off 6% of workforce
(Israel Business Arena Via Thomson Dialog NewsEdge) Comverse Technology Inc. (Pink Sheets: CMVT.PK) has published a preliminary unaudited financial report for the first quarter of 2007, as well as results for subsidiaries Verint Systems Inc. (Pink Sheets: VRNT.PK) and Ulticom Inc. (Pink Sheets: ULCM). The company has published partial results as a result of its involvement in options backdating, revelations about which surfaced last year, requiring it to restate its accounts. Comverse also confirmed a report first published last week by "Globes" that it would be cutting hundreds of jobs in an effort to boost growth in its profit margins.
Comverse posted $407.5 million revenue, an increase of 10% over the corresponding quarter in 2006. Operating profit (on a non-GAAP basis) fell to $7.9 million from $37.1 million in the fourth quarter of 2006. The company posted an operating loss on a GAAP basis of $60.4 million, compared with an operating profit of $8.6 million in the corresponding quarter. Comverse did not disclose data on its net income due to the ongoing backdating scandal.
Comverse CEO and president Andre Dahan said, "Our revenue growth this quarter was achieved despite the slowdown in spending across the telecom industry and slower bookings momentum in products and services over the past few quarters at both Comverse, Inc. and Ulticom, Inc."
Dahan also announced cuts in Comverse's workforce as part of its efforts to improve profitability over the near-term, and said that 6% of the workforce (360 people) would be fired, in order to achieve "double-digit adjusted (non-GAAP) operating margins within a few quarters, while reinvigorating business momentum."
"Globes" first reported last week that Comverse planned to cut hundreds of jobs in order to increase its profitability. The company employs 7,750 people in all its companies, 6,000 of them at Comverse Inc. which develops value added services for telecommunications providers. Comverse Inc. employs 2.500 people in Israel.
Earlier, Comverse subsidiary Verint Systems Inc. (Pink Sheets: VRNT.PK) published its own unaudited report for the first quarter of the year. The company reported sales of $101.3 million, lower than the consensus estimate, which predicted sales of $102.42 million. Verint posted non-GAAP earnings per share of $0.28, missing the consensus estimate of $0.37 per share.
For its part, Comverse's other publicly traded subsidiary Ulticom Inc. (Pink Sheets: ULCM) reported sales of $11.4 million for the first quarter, 27% less than in the corresponding quarter last year.
Published by Globes [online], Israel business news - www.globes.co.il - on June 12, 2007
Copyright of Globes Publisher Itonut (1983) Ltd. 2007
Copyright 2007 Globes, Source: The Financial Times Limited