Comverse Technology, Inc. (CMVT) reported Tuesday a sharp decline in fourth-quarter profit, reflecting mainly a fall in service revenues and a provision for income taxes compared to a benefit last year.
Comverse Technology is a holding company that conducts business through its subsidiaries, principally its wholly-owned subsidiary Comverse, Inc. and its majority-owned subsidiaries Verint Systems Inc and Starhome B.V.
Comverse subsidiary operating margin declined to 5.5 percent from 7.1 percent in the prior year. Comverse VAS operating margin was 31.1 percent, compared to 46.7 percent a year ago. Comverse BSS operating margin increased to 24 percent from 19.5 percent last year.
Charles Burdick, chairman and chief executive officer of the company said, "Although due to several project deferrals we did not experience expected fourth quarter strength in BSS customer solution order activity, our pipeline remains strong and we expect growth in BSS customer order activity."
In the fourth quarter, net income attributable to the company plunged to $4.48 million or $0.02 per share from $15.43 million or $0.07 per share reported last year.
Adjusted earnings were $0.14 per share, significantly down from $0.57 per share in the prior year.
On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.16 per share for the quarter. Analysts' estimates typically exclude special items.
The recent quarter recorded an income tax provision of $7.16 million, while the prior year had a tax benefit of $12.23 million.
Total revenue declined to $405.46 million from $430.84 million in the same quarter last year, which also came below analysts' estimate of $427.35 million. Product revenues increased to $177.52 million from $166.98 million a year ago, while Service revenues dropped to $227.93 million from $263.85 million in the preceding year.
"We achieved operating income and positive operating cash flow for the quarter in each of our three subsidiaries, building a solid foundation to support our future success," Burdick added.
CMVT is currently trading at $6.58, down 3.95 percent, on a volume of 1.27 million shares.
by RTT Staff Writer
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