This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Comverse Shares Drop on Spinoff News

NEW YORK ( TheStreet) - Shares of Comverse Technology (CMVT) fell nearly 4% on heavy volume after the company announced plans to spin off its main operating unit, disappointing investors hoping for an outright buyout.

The stock closed Wednesday at $6.29, down 26 cents, on volume of 8 million, more than eight times the issue's trailing three-month daily average of around 950,000.

"Recall Comverse has been looking to unlock value from its inefficient holding structure for years, and this kicked into higher gear following the resolution of the accounting review in September which opened additional options," RBC Capital Markets analyst Daniel Meron wrote in a report. "Our sense is that Comverse did not receive the adequate valuation from prospective bidders for its assets and moved to a break-up via the public market."

Meron wrote that in the short-term, investors may be "disappointed by the lack of outright M&A to unlock value in a speedy fashion." In the long-term though, Meron sees value appreciation as the company's corporate structure is simplified.

Meron has an outperform rating on the stock. Of the eight analysts who cover the company, five are bullish at either strong buy (3) or buy (2) vs. three holds. The median 12-month price target sits at $9.75.

Comverse shares are down more than 9% in the past year, topping out at $7.99 on June 1 then scraping a 52-week low of $5.91 on Aug. 10.

Comverse Technology is a holding company that includes wholly-owned subsidiary Comverse, a software company, as well as majority-owned subsidiaries Verint (VRNT - Get Report), a workforce optimization company, and Starhome, a roaming services firm.

The Comverse business being spun off to shareholders provides software applications for billing and subscriber management by operators of wireless, wireline and cable networks. The business generated revenue of roughly $243 million in the company's fiscal third quarter. Verint's revenue contribution to Comverse Technology's results was around $99 million, while Starhome contributed $11 million.

Comverse Technology anticipates the split will happen in the second half of 2012.

TheStreet Ratings gave Comverse a D- sell rating.

-- Written by Alexandra Zendrian.



>To contact the writer of this article, click here: Alexandra Zendrian

>To submit a news tip, send an email to: tips@thestreet.com.

>To follow the writer on Twitter, go to Alexandra Zendrian.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
VRNT $65.42 0.17%
AAPL $131.50 -0.41%
FB $80.21 -0.42%
GOOG $538.78 -0.19%
TSLA $249.73 0.93%

Markets

DOW 18,090.52 -72.47 -0.40%
S&P 500 2,114.17 -9.31 -0.44%
NASDAQ 5,088.1410 -18.4520 -0.36%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs