Openwave Systems, Inc. CEO Discusses F4Q11 Results - Earnings Call Transcript

Openwave Systems Inc. ( OPWV)

F4Q11 Earnings Call

August 01, 2011, 17:00 p.m. ET


Mike Bishop - IR, The Blueshirt Group

Ken Denman - CEO

Anne Brennan - CFO


Matthew Hoffman - Cowen and Company

Scott Sutherland - Wedbush Securities

Charlie Anderson - Dougherty and Company

Scott Zeller - Needham & Company



Ladies and gentlemen, thank you for standing by. Welcome to the Openwave’s Earnings Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Monday, August 1st of 2011.

And I’d now like to turn the conference over to Mr. Mike Bishop of Investor Relations. Please go ahead, sir.

Mike Bishop

Thank you. Good afternoon, everyone, and thank you for joining us today to discuss the results of Openwave Systems’ fourth quarter of fiscal year 2011. Joining me today from Redwood City are Ken Denman, Chief Executive Officer, and Anne Brennan, Chief Financial Officer.

Before we discuss the results for the quarter, I want to remind everybody that we are operating under the rules of Regulation FD. The fourth quarter financial results press release was distributed at the close of market today, which includes the non-GAAP to GAAP reconciliation. And if you’ve not yet seen a copy, you can find one at our website at For your convenience, this call is being recorded and will be available for playback from our website for three months.

Before we begin, I would like to remind you that any remarks that may be made on this call or in our earnings press release about future expectations, plans or prospects for the company may constitute forward-looking statements for the purpose of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

The actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors. These factors include the specific risk factors discussed in the company’s press release that was distributed today, and in the company’s filings with the SEC, including, but not limited to, the fiscal 2010 year-end results on Form 10-K, and any other reports subsequently filed with the SEC.

We intend to make forward-looking statements based on management’s outlook as of today. We do not intend to update these statements until the release of Openwave’s next quarterly report and disclaim any obligation to do so prior to that time. We reserve the right to update the outlook for any reason during the quarter.

I would like to note that during the discussion of the financial results, unless otherwise indicated, gross margin expense and earnings related items are reported on a non-GAAP basis, which excludes stock-based compensation, certain realized losses and impairments on investment, amortization of intangibles, restructuring expense, discontinued operations and amounts related to unusual events.

Please access our financial metrics summary, which is available on the Investors section of to review Openwave’s historical financial performance and reconciliation of the non-GAAP measures we report to the corresponding GAAP measures.

With that, I’d like to turn the call to Ken.

Ken Denman

Thanks, Mike and good afternoon, everyone. We issued three announcements at the close of market today; our financial results, the details of our restructuring and the employment of Peter Feld to the Openwave board.

In today’s call, I will highlight we are fundamentally resetting our business both structurally and strategically and now we are adjusting our FY ‘12 operating model to adapt to market and technology changes.

We are restructuring in the wake of our quarterly bookings result but our actions are consistent with the strategies that the Board put in place two years ago when we launched our turnaround process. Two years ago if you recall this company was focused on legacy gateway location and messaging products. We were losing market share and our customers were headed in the new direction.

We began our turnaround process by completely revamping our product strategy and developing new products that could position us for the market’s new directions. We knew it would take some time to be selling these new products.

Last quarter, we thought we hit an inflection point. We were encouraged by our Q3 bookings result. This quarter’s results, however, show that the market is developing more slowly than we had expected. If this quarter’s booking trend continues, we believe, that this restructuring is the best way to create shareholder value. Although we still believe the market will move toward our products, our actions today reflect our disciplined response to the trends that we are seeing in this quarter’s bookings, as well as a challenging market outlook that is being echoed by other perspective vendors in our space, which weakened spending, anticipated from service providers in the second half of this year driven by CapEx reductions that will be lower than historical and seasonal patterns.

In short, we are moving forward with a plan that is designed to ultimately move the company to profitability and to be well positioned for future growth. Before I go into details of business going forward, I will recap quarterly numbers. Revenue was $35.2 million. Non-GAAP EPS was a net loss of $0.10 per share and bookings were $28.5 million. This last number was the factor that determined the actions we were undertaking. If bookings had shown a result similar to last quarter, we would have allowed more time for the plan to unfold.

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