Comverse responded yesterday to reports that AT&T Wireless Services has postponed for an indeterminate period installation of a unified messaging system supplied by the Israeli company.
Management of Comverse, one of the largest local firms traded overseas, stressed that the contract between the two companies has not been annulled but only put on hold. The postponement is due to difficulties encountered by AT&T, one of North America's largest digital wireless network operators, in absorbing the new system. Comverse added that the contract has been signed and the products have been delivered.
The deal, estimated to be worth tens of millions of dollars, was announced in February. In its initial stages, the agreement is expected to earn Comverse $20 million. But even more than the financial aspects, the deal - the first large sale of a unified messaging system to the U.S. market - was regarded as a fine achievement.
Comverse's system, intended for AT&T's third generation (3G) network, includes unification with mobile e-mail, unified inbox, text-to-speech e-mail and voice messaging. Under terms of the agreement, Comverse was also to supply its Trilogue Infinity multimedia messaging system.
The unified messaging market is not Comverse's major source of income, but is considered one of the company's central engines for growth. However, two months ago, some market analysts reported that Comverse had directed its development staff towards low growth areas within the market. Comverse, for example, has developed unified messaging products for use on cellular phones, which, according to HSBC investment bank analysts, will be less popular than that used on PCs.
Comverse Network Systems (a division of Comverse Technology traded on Nasdaq:CMVT) develops and supplys enhanced services for wireless and wireline communications service providers in more than 100 countries and is considered a leading market player. AT&T is considered its most strategically important customer.
While postponement of the AT&T contract may cast a shadow on Comverse's relations with other customers, it is not expected to significantly affect the company's third- and fourth-quarter results. However, company's earnings in the first half of next year will surely suffer due to the delay.