A host of investment banks updated their research coverage of

Comverse Technology

(Nasdaq:CMVT) after its first quarter report and announcement of staff cutbacks. The general consensus is that it's still a good company. SG Cowen drily notes that Comverse, although it's a Buy, should cut back some more.

Lehman Brothers was unmoved either way by the announcement that Comverse is cutting 400 jobs. It preferred to focus on the company's strong revenue stream and ability to meet forecasts.

Lehman Bros. expects Comverse to sustain growth of 25% to 30% a year. It reiterated its Strong Buy rating for the company and set a price target of $85, about 28% above the share's price on the market.

Analyst Tim Luke wrote that the 6% staff cut probably indicates that even market leaders with relatively high visibility are suffering from the slowdown. But he concurs with Comverse's estimate that first quarter sales will reach $356 million, and earnings will reach 42 cents per share. Comverse's target for the year is EPS of $1.78, despite a projected $9 million charge for severance pay.

Luke believes that demand for Comverse's added-value services to telcos, such as voicemail and SMS services, as well as pre-paid calls, remains strong. Comverse's $320 million order backlog will help it weather any slowdown. Luke even predicts that Comverse's orders roster will be even fatter at the end of the first quarter.

Staff cuts won't affect sales

WR Hambrecht concurs that Comverse will meet its targets, and reiterated a Buy rating and price target of $90.

Wireless analyst Peter Friedland notes that Comverse didn't slash jobs that would affect customers, such as support, or its R&D. He therefore does not think the job cuts will affect the company's ability to generate cash.

SG Cowen begs to note that the staff cuts are not enough. It believes Comverse has room to improve its efficiency. The investment house speculates that the companies Comverse bought during 2000 necessitated staff cuts. Last year Comverse acquired Syborg Informationsystems GmbH, Gaya, and eXalink. Nonetheless, SG Cowen also reiterated its Buy rating.