NEW YORK (TheStreet) -- Comverse (CNSI) shares are up 1.29% to $24.34 in early market trading on Monday after the digital services provider acquired privately held secure mobile messaging firm Acision for $135 million in cash, 3.13 million shares of Comverse's common stock, and potential earnout payments of up to $35 million.
Additionally, Comverse will seek to maintain Acision's existing $157 million senior credit facility after the acquisition closes later this year.
"Continued consolidation in the Service Provider space creates the need for strong suppliers. "Our acquisition of Acision underscores Comverse's commitment to quickly building scale and market leadership in the fast-growing digital services sector. This acquisition creates a formidable platform for innovation that is expected to serve our customers' current and evolving needs," said Comverse CEO Philippe Tartavull.
Separately, the company released its first quarter financial results before the opening bell today, missing analysts' quarterly loss expectations by a wide margin.
The Wakefield, MA-based company reported a first quarter net loss of $26.7 million, or a loss of $1.60 per share on an adjusted basis, well below the 18 cents per share analysts expected it to lose.
Revenue for the period fell to $45.71 million from $65.08 million a year ago, also missing Thomson Reuters consensus analyst guidance of $108 million.
TheStreet Ratings team rates COMVERSE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate COMVERSE INC (CNSI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows: