TKLC Tekelec (MM)

We reiterate our long-term Neutral recommendation on Amdocs Ltd. (DOX). The company’s fourth quarter of fiscal 2011 financial results met the Zacks Consensus Estimates.  Amdocs enjoys a strong portfolio of several industry-leading technology integration products for managed services and large transformational projects. Amdocs benefited from the long-term trend toward information technology outsourcing.

We believe consolidation of the telecom industry may act as a growth catalyst for the company. Historically, Amdocs is a major beneficiary of the merger among the big U.S. telecom carriers. We also believe the long-term fundamentals of Amdocs remain firm mainly due to the transition of telecom service providers to converged IP solutions. However, in the near term, the company may suffer due to higher expenses for productivity improvement and prolonged global economic volatility.

Amdocs recently completed the acquisition of Bridgewater Systems of Canada, a leading intelligent software developer for converged mobile platform. Bridgewater’s software optimized mobile data growth, reduces network congestion by diverting data traffic to WiFi networks while enabling wireless service providers to migrate from 2G to 3G or next-generation 4G networks. Bridgewater serves more than 150 wireless operators throughout the world. Important among them are giants such as Verizon Wireless, which is a joint venture between Verizon Communications Inc. (VZ) and Vodafone Group plc. (VOD), Sprint Nextel Corp. (S), Bell Mobility, Telstra, and Etihad Etisalat (Mobily).

Acquisition of Bridgewaterwill help Amdocs to enhance its phone-billing software especially its Customer Experience Systems (CES 8) product suit. For broadband, this software provides a single platform capable of supporting complex requirements of traditional and next- generation triple-play voice, video, and data services as it focuses on addressing favorable market trends in the communications industry.

This solution facilitates carriers to effectively monetize their assets, deliver superior services and improve its operating performance. Using Amdocs with integrated Bridgewater software enable wireless carriers to offer innovative pricing strategy for data plans. While enabling its customers to offer personalized value-based pricing strategy, Amdocs can now move one step forward compared with its rivals, such as Comverse Technologies Inc, Convergys Corp. (CVG), and Tekelec (TKLC).

 
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