Comverse Technology Inc. (Pink Sheets: CMVT) released its first quarter results, for the three months to April, yesterday. It thus met the timetable required for re-listing on Nasdaq. However, the numbers themselves, though showing improvement, are no great cause for celebration.
Comverse Technology is a holding company with subsidiaries in various areas of software. These are Starhome, Verint Systems Inc. (Nasdaq: VRNT) (52%), and Comverse CNS, which is responsible for the group's billing and value added services business.
Verint, which develops and sells video and voice recording systems, released its first quarter results earlier this month, reporting a loss of $3.6 million on a GAAP basis, so that the focus in Comverse's release is on the performance of Comverse CNS.
Comverse CNS had revenue of $163.2 million in the quarter, representing a decline of 7.3% in comparison with the corresponding quarter last year. Sales of software solutions fell 11.8%, to $91.3 million, while revenue from services and maintenance contracts was fairly flat, at $71.9 million.
The breakdown of software solutions sales shows that while billing activity grew, the value added services division suffered a fall in sales compared with the corresponding quarter. Billing revenue rose 11.7% to $43.3 million, but revenue from value added services fell 25.8% to $48 million.
Comverse CNS posted an operating loss of $37.7 million in the first quarter, 30.6% less than the operating loss in the first quarter of 2010. The first quarter is generally considered weak.
On a GAAP basis, Comverse Technology lost $59.2 million in the first quarter, 27.7% less than the loss it posted in the first quarter of 2010. On a non-GAAP basis, the first quarter 2011 loss was $6.2 million ($0.03 per share), 79.8% less than the loss of $30.7 million ($0.15 per share) in the first quarter of 2010.
At the end of April this year, Comverse Technology had net cash of $380.3 million, down from $457.6 million at the end of January. $51.6 million of the decline in cash "related to professional fees, restructurings, repayment of borrowings, special retention bonuses, a litigation settlement and separation agreements with certain former officers," among them former CEO Andre Dahan, who left in March. In May, the company paid out $30 million in cash to settle a class action brought by shareholders.
Of the cash balance, restricted cash aggregated $69.0 million, compared with $67.9 million at the end of January. The balance excludes auction rate securities (ARS). At the end of April, Comverse Technology had $94.2 million aggregate principal amount of ARS valued at $72.4 million.
Since the beginning of the year, Comverse Technology's share price has risen 4.5%. It is currently traded on the Pink Sheets, with a market cap of $1.54 billion.
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