July 10, 2007 / 6:33 PM / 12 years ago

Comverse Technology up for sale: report

BOSTON (Reuters) - The board of software maker Comverse Technology Inc. CMVT.PK has instructed management to sell the company and its subsidiaries, Israel’s TheMarker financial news Web site reported on Tuesday.

The news sent Comverse’s shares up as much as 11 percent on the Pink Sheets, even as a spokesman for the U.S.-Israeli company declined to comment on the report on the Hebrew-language news site, which did not disclose its source.

Comverse’s executive suite has been in turmoil since early last year, when it started investigating an accounting scandal that led to the ouster of several senior managers including company founder and Chief Executive Jacob “Kobi” Alexander.

The company is one of more than 170 that are auditing past stock option grants, or being investigated by authorities, over alleged backdating in one of the largest U.S. accounting scandals in terms of the number of companies involved.

Comverse’s stock was delisted from Nasdaq in February because it had failed to meet exchange deadlines for submitting public financial reports as a result of the prolonged audit.

The shares rose as high as $22.70, before trading up $1.36 at $21.75 at mid-afternoon. In early 2006 they were trading for about $29.

The maker of software for telecommunications carriers and security companies has executive headquarters in New York City, and substantial operations in Israel, where the government has helped fund some of its research and development.

A sale of the company would likely split Comverse from its two publicly traded subsidiaries, Verint Systems VRNT.PK and Ulticom ULCM.PK, said FBR analyst Daniel Ives.

Shareholders could realistically expect to get the equivalent of a price somewhere in the high $20s to the low $30s for the full assets of Comverse, he said in a research note.

“We would loudly applaud this decision, as it would unlock significant value for shareholders,” Ives said.

About 70 percent of Comverse Technology’s revenue comes from its Comverse Network Systems division, according to Ives. Its products handle voice mail, data services and billing for telecommunications companies.

Verint’s software helps security forces and intelligence agencies gather, analyze and store data from video surveillance cameras as well as intercepted email correspondence tapped telephone conversations.

Ulticom’s software helps run telecommunications networks, handling tasks such as text messaging, signaling and switching.

Comverse also has two smaller subsidiaries: Call center software maker Startel and mobile-roaming technology provider Starhome.

Company spokesman Paul Baker declined to comment. “As company policy, we never comment on speculation,” he said.

Comverse appointed a new CEO in April, tapping former AT&T Wireless (T.N) executive Andre Dahan to run the company. But its former boss remains in the news.

Alexander faces U.S. charges of conspiracy, securities fraud and other wrongdoing, on allegations of involvement in a scheme to backdate millions of executive stock options at Comverse. He is free on bail in Namibia.

A Namibian court on Monday postponed Alexander’s extradition hearing yet again after proceedings stalled over which judge should hear the case.

Last month Comverse lost another key executive.

Paul Robinson, its president, chief operating officer and general counsel, was terminated on June 29, according to an 8-K filing with the U.S. Securities and Exchange Commission that did not explain the reason for his departure.

Additional reporting by Tova Cohen in Tel Aviv

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