Written by: Israel Investor Newsletter | June 12, 2007
By Douglas Goldstein, CFP
www.IsraelNewsletter.com
When Kiplinger Magazine asked some outstanding money managers to list a few of their favorite picks, Israeli business software & services darling Amdocs was one of their select few. Thornburg Core Growth manager, Alex Motola, (whose 3-year batting average has shown more than twice the performance of the benchmark Russell 3000 Growth Index) says that he searches for, “highly sustainable, growing franchises that are selling at reasonable prices and that are not subject to constant technological innovation or price competition.”
According to Kiplingers, “His largest position is in Amdocs (DOX), a billing-software and customer-care provider for the telecommunications industry. Clients such as Sprint Nextel and Bell Canada hire Amdocs to install software and operate billing and customer-care applications. Between Amdocs’ rising profit margins and recovering stock values in the telecom sector, Motola still sees good upside in the shares, which trade at 17 times estimated profits.”
Amdocs recently announced a deal with the largest multi-play provider in Romania to further differentiate with innovative satellite TV, next-generation broadband Internet and number portability offerings. And a week before that, Kazakhstan’s largest telelecom operator selected Amdocs to support its delivery of Next-Generation Services. Amdocs’ Billing and Mediation Solutions will enable Kazakhtelecom to offer innovative IP-based services.
Amdocs had revenue of $2.48 billion in fiscal 2006, has over 16,000 employees, and serves customers in more than 50 countries around the world. Though it might be considered expensive compared to some of its competitors (P/E (ttm) of about 25 compared to some of the cheaper plays with ratios in the 15 to 20 range), when looked at against the industry with an average P/E of over 30, the stock seems to have potential. And moreover, its year over year revenue growth is beating the industry (17.5% vs. 16.4%). If Amdocs can keep signing new deals, then maybe Alex Motola will be proven right in his bullish outlook for the stock.
Disclosure: Author’s fund is long DOX as of 6/12/07.
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Douglas Goldstein is the Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email doug@profile-financial.com.
Written by: Israel Investor Newsletter | June 12, 2007
IsraelNewsletter publishes analysis on big news for Teva Pharmaceuticals.
IsraelNewsletter’s Doug Goldstein does the work on leading auto-theft prevention company.
Written by: Aaron Katsman | June 12, 2007
By Aaron Katsman
www.IsraelNewsletter.com
No question that last night’s earnings report from Comverse(CMVT.pk) was lousy. In fact as someone who has been trumpeting the stock, especially as an M&A target, to say I was shocked at how soft the numbers were is an understatement. Due to the ongoing option-backdating scandal, the company released un-audited numbers. They actually reported a first quarter 2007 loss from operations on a GAAP basis of $60.4 million, compared with GAAP income from operations of $8.6 million for the first quarter 2006. Comverse certainly wasn’t helped by sector wide slowdown in telecom spending. They did manage to post a YOY 10% increase in revenue.
Andre Dahan, President and Chief Executive Officer of Comverse Technology, Inc. said, “Our 10% revenue growth this quarter was achieved despite two factors: (1) a slowdown in spending across the telecom industry and (2) slower bookings momentum in products and services over the past few quarters at both Comverse, Inc. and Ulticom(ULCM.pk), Inc. This was partially offset by continued strength at our Verint Systems(VRNT.pk) Inc. subsidiary.” It certainly seems to me that Verint is the star performer here, and they are in a strong growth market.
Mr. Dahan confirmed rumors that they plan on letting go 6% of the workforce as part of a streamlining and overall reorganization of the company. The big question for investors is whether this is the last bit of bad news that will come out or are we still somewhere in a dark tunnel? Certainly today’s drop of around 5% is an indication that the market has given up. I on the other hand still stick to what I have mentioned in previous posts that this still makes for a very attractive private equity or M&A play . With over $1.8 billion in cash, a private equity firm could take the company and their subsidiaries private, use the cash to help with the restructure and then after things turnaround, re-IPO them.
With an eye towards the long-term I would use today’s drop as an opportunity to add to or start a new position in the stock. I think that we could see the re-organization succeed and the company work things out with the SEC, and then we could start seeing the real value of the company.
Disclosure: Author’s fund is long CMVT.pk and VRNT.pk as of 6/12/07. He does not hold positions in the other companies listed.
Please see our Disclaimer HERE.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Written by: Zack Miller | June 12, 2007
Teva (TEVA) to resume Lotrel sale after US ruling. Novartis counters by planning its own generic offering. Read IsraelNewsletter’s analysis of Teva’s win.
Haaretz with the scoop that Tower Semi (TSEM) is in advanced negotiations to sell their semiconductors to two large Chinese companies. Each win is expected to be worth multiple millions of dollars a year.
ECtel (ECTX) announced that a leading telecom operator in Russia has placed a first-time order for ECtel’s FraudView 8. ECtel’s CEO and President, Itzik Weinstein, was quoted as saying, “We see excellent opportunities in The Former Soviet Union region as demonstrated at this order as well as other recent orders.” See our recent coverage of ECTel as a leading fraud prevention service provider.
Companies reporting:
Comverse (CMVT.PK)
Verint (VRNT)
Ulticom (ULCM.PK)
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