MIRA INFORM
REPORT
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Report Date : |
28.02.2011 |
IDENTIFICATION DETAILS
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Name : |
Comverse Ltd. |
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Formerly Known As : |
COMVERSE NETWORK SYSTEMS LTD |
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Registered Office : |
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Country : |
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Financials (as on) : |
31.01.2009 |
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Date of Incorporation : |
23.12.1982 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Software Developers, Designers, Manufacturers,
Exporters and Marketers of Multimedia Telecommunications. |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
US$ 1,000,000 |
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Status : |
Satisfactory |
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Payment
Behaviour : |
No Complaints |
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Litigation : |
Clear |
NOTES:
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 30, 2010
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Country Name |
Previous Rating (01.04.2010) |
Current Rating (30.06.2010) |
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A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
Company Name and address
COMVERSE LTD.
Telephone 972
3 645 22 22
Fax 972
3 645 25 07
Ramat Hahayal
TEL AVIV-69710-ISRAEL
HISTORY
& LEGAL FORMATION
A private limited company,
incorporated as per file No. 51-095816-8 on the 23.12.1982.
Originally established under the name EFRAT
FUTURE TECHNOLOGY LTD.
Following the strategic reorganization of the
COMVERSE Group, changed its name to COMVERSE NETWORK SYSTEMS LTD., which
changed to the present name on the 15.5.2001.
The move included a split in subject’s
activities and the establishment of sister company, COMVERSE INFOSYS LTD.
(VERINT today), as of the 20.1.1999 (see more OTHER COMPANIES).
On the 12.3.2001 NATOLOGI LTD. was merged into
subject.
SHARE
CAPITAL
Authorized share capital
1,000
ordinary shares of
of which 265 shares amounting to
SHAREHOLDERS
Subject is fully owned by COMVERSE INC. (CNS), a wholly-owned subsidiary of
COMVERSE TECHNOLOGY INC. (both of the
DIRECTORS
1. Andre Dahan, President and CEO (subject and
COMVERSE TECHNOLOGY),
2. Dror Bin, President Global Sales and Executive
VP,
3. Joel Ellis Lagon, of the
4. Shah Ashok Shefali.
BUSINESS
Software developers, designers, manufacturers,
exporters and marketers of multimedia telecommunications applications,
providers of software and systems enabling value-added services for voice,
messaging, mobile Internet and mobile advertising; converged billing and active
customer management and IP communications.
Customers are over 450 communication service providers in over 125
countries.
Among customers: AOL GERMANY, BRITISH TELECOM, ECONET GROUP, FRANCE
TELECOM, KPN, MTN GROUP, O2 GROUP, TELEFONICA GLOBAL, TIM, T-MOBILE GROUP,
VIMPLECOM, VODACOM GROUP, VODAFONE GROUP, AT&T, BELLSOUTH, CINGULAR
WIRELESS, SPRINT NEXTEL, TELEFONICA, TELMEX, VERIZON WIRELESS, CHINA MOBILE,
CHINA TELECOM, SINGTEL, SMART, TAIWAN MOBILE, TELSTRA, etc.
Among
local suppliers: RADVISION, M.H.M. FASTENERS, TRANS ELECTRIC.
Operating from rented premises, on an area of
67,000 sq. meters in
Having some
During 2009 subject dismissed of some 190 employees in
Having 6,900 employees in the whole COMVERSE Group
(including subsidiaries), of which around 2,700* in
* According to the Annual 2009 report published
October 2010 Israeli employees comprise of 40% of total employees.
MEANS
COMVERSE TECHNOLOGY
INC. current market value US$ 1.57 billion.
As of January 31,
2009, subject had a US$20 million line of credit with a bank,
which was utilized
for guarantees and execution of foreign currency transactions.
In August 2010
COMVERSE announced its cash shrunk to US$ 330 million and its expects cash flow
problems.
In September 2010
subject sold a real estate asset in Raanana for US$ 28.5 million.
COMVERSE TECHNOLOGY backlog
(as of 31.01.2010) US$ 1,231 million.
Subject’s financial data is included in parent, COMVERSE TECHNOLOGY INC.
consolidated B/S, which shows (last obtainable – see below in CHARACTER):
Note: Subject comprises some 70% of parent's income/activity.
US$
(thousands)
31.01.2009 31.01.2008
ASSETS
Current assets
Cash and cash
equivalents 1,078,927 1,239,190
Restricted Cash,
Bank time deposits and
short- term
investments 251,584 239,110
Accounts receivable,
net 315,564 381,217
Inventories 85,492 77,816
Prepaid expenses and other current assets 214,836
_267,896
1,946,403 2,205,229
Property and equipment, net 120,385 145,088
Goodwill and other intangible assets 1,219,690 1,396,630
Other assets
_461,790 _422,541
3,748,268 4,169,488
======== ========
LIABILITIES
Current liabilities 1,460,451 1,540,117
Other liabilities 1,524,630 1,510,508
Minority interest 109,929 138,639
Equity 653,258 980,224
3,748,268 4,169,488
======== ========
Subject is an “Approved Enterprise” and as such entitled for State support
and tax relief. In August 1997 the Israeli Investment Centre (IIC) approved a
US$ 1.2 million investment plan for the plant expansion. In February
IIC approved a
In January 2003, IIC approved another US$ 3.5 million investment plan for
the expansion of subject's plant.
There is 1 charge
for an unlimited amount, as well as 1 charge on the sum of US$ 20,000,000.00
registered on the company's assets, in favor of Bank Hapoalim Ltd. and Bank Leumi
Le’Israel Ltd.
ANNUAL
SALES
COMVERSE
TECHNOLOGY INC.
Consolidated
Statement of Income
US$
(thousands)
Year
ended 31st January
2007 2008 2009
Sales 1,431,951 1,723,551 1,677,439
Operating loss (389,795) (421,815) (209,926)
Pre-tax loss (282,285) (435,582) (303,249)
Net loss (313,858) (373,209) (320,405)
======== ======== ========
Subject’s (solo) sales (for
Fiscal Year Ended on 31st January):
2007 sales were US$ 975,516,000, making with a net
profit of US$13,970,000.
2008 sales were US$ 1,098,209,000 (US$ 1,098,209,000
after adjustments), making an operating loss of US$ 258,656,000, ending with a
net profit of US$39,847,000 (after adjustments).
2009 sales were US$ 920,605,000 (US$ 925,244,000 after
adjustments), making an operating loss of US$ 160,243,000, ending with a net loss
of US$20,530,000 (after adjustments).
OTHER
COMPANIES
COMVERSE TECHNOLOGY INC.
other holdings:
COMVERSE INC. (CNS), 100%,
VERINT SYSTEMS INC. (and VERINT SYSTEMS LTD.),
66.5%, provider of analytic software-based solutions for the security and
business intelligence markets. Publicly traded on the Nasdaq Stock Exchange
(symbol: VRNT), current market value US$ 1,148 million. Having some 2,550
employees
ULTICOM INC., 66.4%, Publicly traded on the
Nasdaq Stock Exchange (symbol: ULCM), current market value US$ 89.5 million,
provides the telecommunications industry with signaling software that enables
development and deployment of mobility, location, payment, switching and
messaging services within wireless, IP and wireline networks.
STARHOME B.V., 100%
STAR HOME LTD., 100%, specializing in roaming services for cellular
operators.
Also having other less significant subsidiaries.
BANKERS
·
Bank
Hapoalim Ltd.,
·
Bank Leumi
LeIsrael Ltd., Central Branch (No. 800), Tel Aviv.
CHARACTER
AND REPUTATION
In the beginning of 2006 the SEC begun investigations against COMVERSE TECHNOLOGY
INC in suspicions of stocks felonies regarding frauds in handling of options
that COMVERSE issued in previous years. The "backdating" affair led
to pressing charges by the SEC to the New York District Court in August 2006
against 3 former senior officials, the main one being subject's founder and
until then the long serving chairman and CEO of COMVERSE, Jacob (Kobi)
Alexander. The other 2 are the CFO and another company director. All three
resigned in May 2006.
Criminal lawsuits were filed for frauds estimated at millions of US$, which
went to the defendants pockets. Mr. Alexander was announced
"fugitive" after not appearing in the Court (now in legal extradition
process in
In December 2009 COMVERSE finally signed an arrangement in the matter of
the class action submitted in the New York Court by investors. According to the
agreement, the investors will receive compensations in value of US$ 225
million, of which COMVERSE will pay US$ 165 million and the reminder will be
financed privately by Mr. Alexander.
From 2006 until October 2010 COMVERSE did not submitted the annual reports
(10-K) to the SEC. COMVERSE officials said that due to the
"backdating" affair the company had delays in completing its reports.
As a result, parent co's shares were de-listed from the main list in Nasdaq
(over to the "Pink Sheets). Finally, after many delays and extensions
periods on October 4th, 2010 COMVERSE published its annual 2009
report including the SEC revised 2005-2008 statements.
All the above, affected subject's and other subsidiaries activities in
practice. The estimated expenses by COMVERSE to-date due to the affair to the
CPA firms is circa US$ 500 million, that besides other aspects that
incurred heavy damages, as also can be seen in the recent financial reports
published. In August 2010 COMVERSE announced it has a severe cash shortage, and
is intending to go through a wide re-organization (including layoffs – see
BUSINESS above).
COMVERSE is the leading company in the world in
their fields, serving leading network operator customers worldwide.
Professionally it has a very good reputation. It has the largest global market
share for providing Multimedia Messaging Centers (MMSC) to global telecom
carriers and considered the largest in the world in value-added services and
billing solutions to Telco’s.
In January 1998 parent company acquired one of its main competitors, BOSTON
TECHNOLOGY INC., for US$ 858 million in stocks, and merged its activities
within subject.
In 1999, COMVERSE acquired AMAREX TECHNOLOGY
INC.
In 2000 COMVERSE acquired Israeli start-up
EXALINK LTD. for US$ 224 million (in stocks) and of LORONIX INFORMATION
SYSTEMS, INC. of the
In 2002 subject acquired Israeli start-up ODIGO for a sum of US$ 17
million.
In April 2000 sister company ULTICOM INC. completed
its IPO on Nasdaq Stock Exchange and in May 2002 sister company VERINT INC.
also listed its shares on Nasdaq, raising US$ 72 million based on a company
value of US$ 350 million.
In May 2006 subject completed its acquisition of
French NETCENTREX S.A., for US$173 million in cash.
In September 2006 subject completed its
acquisition of privately-held NETONOMY for US$19 million in cash.
Among deals reported in recent years:
October 2007: 3 deals in total value of tens of
US$ millions, the largest of which with MOVILNET of Venezuela (billing
solutions), and VAS to LITECOM of Switzerland and P&T LUXEMBOURG.
December 2007: US$ 20 million continuation
contract for ALLTEL WIRELESS (
January 2008: Tens of millions deal, supplying
MTS of Russia and CIS countries billing solutions.
August 2008: Supply for Israeli BEZEQ switches
for its
November 2008: Supply of billing and other
value-added services for CAT TELECOM of
Since the breaking out of the "backdating" affair, the Group has
been going through several turbulences in its structure and strategy. Besides the
dismissals in recent years, COMVERSE has been shifting workers from
Among the main options for COMVERSE TECHNOLOGY to overcome the crisis has
been to sell some of its subsidiaries or possible mergers into larger global
players.
In October 2010 it was reported that GOLDMAN SACKS ORACLE started a tender
process for finding a buyer for COMVERSE TECHNOLOGY and in November it was
reported that PLATINUM EQUITY are intending to acquire COMVERSE according to a
value of US$ 2 billion, giving some 30% premium over market price.
Despite our
efforts, we were unable to speak to subject's officials; we left them several
messages, which so far remain unanswered.
SUMMARY
Despite the unclear situation of the COMVERSE Group,
especially in the financial aspect, for the time being considered good for
trade engagements, yet follow-up is recommended.
Maximum unsecured
credit recommended at this stage US$ 1,000,000.
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.45.37 |
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|
1 |
Rs.73.25 |
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Euro |
1 |
Rs.62.68 |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
This score serves as a reference to assess SC’s credit risk and
to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.