Bank Hapoalim

analyst Catherine Lemaitre has reiterated her Hold rating for

Nice Systems

(Nasdaq:NICE), but cut its price target from $17 to $15.5, which is 7% higher than the market.

The analyst explains that the price target reduction is attributed to the great degree of uncertainty surrounding the Nice business environment, at least for the coming quarters.

Lemaitre notes Nice's recently announced marketing agreement with India's Tata Telecom, a leading Indian contact center firm. Tata Telecom is to sell, install and provide technical support for Nice's products in India.

Although Lemaitre doesn't expect this agreement to generate significant revenues in the short term, she believes the agreement has great long term potential, especially in light of the current tendency to transfer contact centers from high paying wage centers such as the United States and England, to low-wage English-speaking countries.

The analyst says that the Nice management team is carrying out several substantial changes in order to expand its revenue sources, cut costs, and gain greater flexibility in its expense structure. Nice consolidated its marketing offices in the United States, and slashed its workforce by 20%.

In addition, Nice is trying to generate customer revenues by providing support services. This is expected to help Nice improve its ability to forecast at least some of its revenues, as service agreements are usually undertaken on a long-term basis.

Despite this, Lemaitre notes that its service revenues are still insubstantial, but they are expected to rise consistently in the coming quarters. Nice wants its service-based revenues to comprise 10% of its aggregate revenues by the year's end.

In addition, the company wants to transfer part of its production to subcontractors. This is expected to help reduce costs and increase production flexibility. Nice hopes to have completed its organizational changes by the end of this year.

The analyst says that despite Nice's current crisis, it remains a leader in telephony digital recording and has a wide range of products in the advanced recording, quality control, and data-collection fields.

Nice also has marketing agreements with leading players in the contact-center market. The company is in the process of penetrating the market with its NiceVision product - a digital video and audio recording system that provides continuous recording, archiving and debriefing capabilities. The product is intended for a relatively new market, which has great potential, the analyst remarks.

In light of all this, Lemaitre believes that once this market sector improves, Nice will post significantly improved results within a relatively short time.