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AudioCodes VP finance: Comverse Infosys contract could trigger more deals

"As infrastructure providers we are at the bottom of the food chain, and so unlike suppliers of equipment to end users, we have no idea how much we will make."

AudioCodes (Nasdaq:AUDC), a developer of technologies for voice transfer via Internet protocols VoIP and VoATM, today announced its first enhanced services contract with Comverse Infosys, a subsidiary of Comverse Technology (Nasdaq:CMVT). Comverse Infosys is a provider of digital voice and video recording solutions and data processing. According to the agreement, AudioCodes products will be used in Comverse Infosys's next generation recording platforms.

AudioCodes regards the contract a significant breakthrough. According to the company's VP of Finance and CFO, Mike Lilo, "Comverse is a top of the line company, and although we announced our entry into the value added services sector six months ago, this is our first design win." AudioCodes believes Comverse to be a market leader, a contract with whom could lead to more opportunities. "Comverse did not cut us any slack, and field tests lasted six months," another reason why the company views the license from Comverse as a sort of a promotional tool.

AudioCodes operates in many different fields, and has several months ago announced its entry into the cellular market. The company, originally in the field of telephony, provides infrastructure to communication companies. In the cellular market the company's technology helps transfer communication between the switchboards.

The company believes the enhanced services market that it is now entering is a growing strategic market which includes digital recording services, unified messaging, short message relay, music transfer etc. Comverse is active in these very fields, which means the agreement with Comverse Infosys could possibly pave AudioCodes' way into Comverse in general. Lilo rejects these estimates and says the "other divisions are independent enough and can do their own testing," without having to rely on those done by Comverse Infosys.

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Contract to yield revenues in second-half of 2002
AudioCodes gave no financial estimates on the Comverse contract. According to Lilo, "As infrastructure providers we are at the bottom of the food chain, and so unlike suppliers of equipment to end users, we have no idea how much we will make." He does estimate however that any revenues from the OEM agreement with Comverse will affect the company's revenue line as of the second half of 2002. He does not predict any new customers of Comverse's scope will be announced but he did conclude "there will be other interesting developments in other areas in the next few months."

AudioCodes will provide Comverse Infosys an amalgam of software and hardware to be placed within its recording platform and will act as IP based interface to traditional telephony. In the tender for the infrastructures, the company beat two heavy contenders, Natural MicroSystems (Nasdaq:NMSS) and Intel's dialogics division.

Several months ago NMS announced its entry to Israel through Beit Shemesh-based startup Mobilee. NMS is generally viewed as Comverse's "in-house supplier", as Lilo puts it, and AudioCodes' eternal competition. Both companies provide voice transfer via IP based networks sytems to communication equipment providers. This is not the first time AudioCodes beats NMS. The last time AudioCodes outdid NMS was in the tender by communication equipment provider Clarent (Nasdaq:CLRN).