Post-Delisting, Verint Still Stumbling

Nearly two years ago, when Aaron Katsman, managing director of America Israel Investment Associates, started hunting for his next investment, Verint Systems(VRNT Quote) seemed like a real find.

Verint makes "video intelligence" products that help customers sort through hours of security videos and analyze them for potential threats. After Sept. 11, it was a fast-growing market -- and Verint looked as if it was at the center of it.

"It was a strong growth company in what we perceived as an up-and-coming niche," says Katsman about his thinking in late 2005. "We rode it part of the way up and now are a part of the way down."

That way down has been a steady slide. Earlier this year, Verint Systems was booted from the Nasdaq for failing to file its financial statements on time. It has traded on the Pink Sheets since Feb. 1.

The company's ambitions don't seem affected. In February, Verint acquired workforce management services provider Witness Systems in a $950 million deal that turned Verint into the second-largest company in the sector, behind rival Nice Systems(NICE Quote).

But for investors, betting on Verint has become an unexpected gamble -- and highlights a unique dilemma as to how Wall Street and traders deal with a delisted company sporting a billion-dollar market cap that's growing in a hot market.