Comverse reveals $60 million operating loss and 370 job losses
Half the operating loss is the cost of a special panel looking into its accounting and option problems
Last night local time, Comverse Technologies (Nasdaq: CMVT) announced partial results for the first quarter of 2007. It couldn't announce all its results because the technology group hasn't finished straightening up its books after stock-option and other financial fiascos that require it to restate results going back ten years.
Anyway, Comverse Technologies, under new management now that the some of the old management has fled justice or been arrested, reported to a heavy operating loss of $60 million and 370 dismissals, or 6% of its workforce.
One reason for the heavy operating loss is the weighty $32.1 million cost for a legal committee that looked into the company's policies regarding stock options and accounting. The committee has finished its work, Comverse Technologies says, therefore this particular cost should all but vanish in the second quarter of 2007.
The company adds that it should resume publishing full financial statements by the end of January 2008.
Revenues increased 10% year over year against the parallel quarter to $405.7 million, Comverse Technologies said. Its backlog of orders dwindled during the January-March period by 4.2% to $759 million.
Subsidiary Comverse, which develops value-added and billing software for telcos, reported a 10% increase in revenues to $285 million.
Revenues from subsidiary Verint Systems (Nasdaq: VRNT - 57%) rose 15% against the corresponding quarter of 2006 to $101 million. Ulticom (Nasdaq: ULCM - 68%) reported a 27% dive in year over year revenues to $11.4 million.
StarHome sales weakened by 6% against the same period of 2006 to $9.7 million, Comverse Technologies said.
Comverse and its units have been unable to report their full financial statements for more than a year, after being caught backdating and spring-loading stock option grants, to name but one of its misdeeds. Company founder and leader Kobi Alexander fled justice to, it turned out, Namibia, where he is undergoing glacial extradition proceedings and is meanwhile basing himself as a local businessman and philanthropist.
Two other top ex-Comversites, former general counsel William Sorin and ex-chief financial officer David Kreinberg, have entered plea bargain agreements. Sorin was sentenced to 366 days in prison for his role in backdating stock options and was slammed with $52 million compensation to shareholders.
Kreinberg told U.S. attorneys that Alexander had tried to bribe him to take full responsibility for the troubles at Comverse. He refused.
The new CEO, Andre Dahan, explains that dismissals were necessary because of the drop in the company's backlog. The company has 6,100 employees, of whom 2,900 work in Israel.
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