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Comverse Technology, Inc. (CMVT)

F2Q07 (Qtr End 7/31/07) Earnings Call

September 10, 2007, 5:00 PM ET

Executives

Paul D. Baker - VP, Corporate Marketing and Communications

Andre Dahan - President and CEO

Avi T. Aronovitz - Interim CFO, VP - Finance and Treasurer

Analysts

Tom Roderick - Thomas Weisel Partners

Daniel Ives - Friedman, Billings, Ramsey & Co.

Thomas Ernst - Deutsche Bank Securities

Daniel Meron - RBC Capital Markets

Shaul Eyal - CIBC World Markets

Lawrence Harris - Oppenheimer & Co.

Scott P. Sutherland - Wedbush Morgan Securities

Sterling Auty - J. P. Morgan

Larry Berlin - First Analysis Corp

Jeff Kvaal - Lehman Brothers

Tal Liani - Merrill Lynch

Presentation

Operator

Good afternoon. My name is Jason, and I will be your conference operator today. At this time, I would like to welcome everyone to Comverse Technology's Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. Mr. Baker, you may begin your conference.

Paul D. Baker - Vice President, Corporate Marketing and Communications

Thank you, Jason. Well, I am Paul Baker Vice President at Comverse Technology, which is traded on the Pink Sheet, ticker symbol CMVT.PK.

With me on the call today are; Andre Dahan, our President and CEO; Avi Aronovitz, our Interim Chief Financial Officer; and others to provide support for this call.

Earlier this afternoon, we issued a press release disclosing certain preliminary unaudited selected financial information for the second quarter of fiscal 2007. You have not received this press release; please refer to businesswire.com or our website at cmvt.com.

Before starting the call, I would like to mention that certain statements that may be made on the call that are not historical are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as estimate, project, intend, expect, believe, and similar expressions in the affirmative and the negative are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainty.

Any number of factors could cause the actual results, performance and achievements of the company to materially differ from those expressed or implied in such forward-looking information. For a discussion of certain risks and uncertainties that may cause actual results to be different from forward-looking statements made in this call, we refer you to the disclosure set forth in Item 2.02 of the Form 8-K issued today in conjunction with our second quarter results press release.

The preliminary unaudited selected financial information presented today is subject to change as based on financial information currently available to us. Material adjustments may result from the company's investigations of stock option grants and practices and other unrelated accounting matters. In addition, the company's independent registered public accounting firm has not reviewed or audited the financial information presented, and therefore, such financial information may be subject to additional adjustments which could be material.

Consistent with our recent practice, we do not currently intend to provide revenue and EPS guidance.

As a result of the ongoing investigation by the special committee, Comverse has not yet been to able to file with the SEC our annual report on Form 10-K for the fiscal year ended January 31st, 2006 and January 31st 2007 or our quarterly reports on Form 10-Q for the period ended April 30th, 2006 and subsequent period.

The content of this conference call is time-sensitive and reflects the company's perspective as of September 10th, 2007. Comverse Technology undertakes no obligation to update the content of this call including any forward-looking statements even if events, circumstances or expectations change after this call.

Certain non-GAAP financial measures will also be discussed today. GAAP refers to Generally Accepted Accounting Principles. Adjusted non-GAAP measures are presented in a manner consistent with the company's prior practice with respect to the presentation of financial measures on a pro forma basis. The term pro forma we'll use today refers to adjusted non-GAAP measures. You'll find a reconciliation of the differences between the pro forma of financial measures and the most comparable GAPP measures at the end of this afternoon's press release.

Certain numbers and percentages have been rounded and maybe approximations. Any redistribution, retransmission, or rebroadcast of this call in any form without the expressed written consent of Comverse Technology is strictly prohibited.

With that, I will turn the microphone over to our President and CEO Andre Dahan. Andre?

Andre Dahan - President and Chief Executive Officer

Thank you, Paul. Hello everyone, and thank you for attending our call this afternoon. I'll begin this call with the highlights from our consolidated results for the second quarter, then we'll review the operations of each of our major businesses, followed by a few words on the strategic review of Comverse Technology announced earlier this year, and the status of our restatement process. Then Avi will provide more details on our second quarter results, and afterward we'll open the line for questions.

This quarter, each of our four major operating subsidiaries achieved sequential growth in revenue and pro forma operating margin. We're very pleased that we're progressing toward our goal of significantly improved profitability and revenue growth. Our consolidated pro forma operating margin increased sequentially by 520 basis points from 1.9% in the first quarter to a pro forma operating margin of 7.1% in the second quarter.

This first step shows that we are on the right track. In addition, business momentum improved as both revenue and product bookings increased sequentially, and we ended up the second quarter with a record backlog of $848.6 million. In the second quarter, pro forma revenue increased 12% sequentially to $454 million, and grew 15% year-over-year. This 15% or $59.9 million of growth was attributed to Comverse, Inc. growth of 5%, or $13.2 million, and Verint's growth of 49% or $44.8 million.

Verint's revenue included $44.5 million of contribution from Witness Systems, which Verint acquired on May 25th, 2007. As Verint discussed in June, certain Witness Systems' deferred maintenance and service revenue is not recognizable through GAAP purchase accounting, but it is being presented as part of pro forma revenue to provide what we believe is a more accurate reflection of Witness' revenue run rate and comparative data.

In the second quarter, this Witness deferred revenue amounted to $7.5 million. Other contributors to revenue growth this quarter were Starhome growth of 24%, or $2.5 million, and Ulticom growth of 1%, or $0.2 million year-over-year.

Now let's discuss our major operations in greater detail. First, Comverse, Inc. In Q2 Comverse achieved both year-over-year and sequential revenue growth and a significant sequential increase in product bookings. Additionally, Comverse realized substantial expansion in pro forma operating margin with sequential improvement of 370 basis points from 3% in the first quarter of 2007 to 6.7% in the second quarter.

Our short-term goal: double-digit operating margin within a couple of quarters and review the improvement this quarter as an important milestone in achieving this goal. This margin expansion was probably due to the early actions associated with our framework for profitable growth as well as favorable product mix in the quarter. Coupled with the broad market revenue growth on a sustained basis, longer term, we are targeting best-in-class operating margins.

We continue to build the framework for profitable growth at Comverse as the contact for the strategy and operational plans for the company. We are now focused on financial discipline and the development of revenue drivers to address the most urgent needs of our customers. These actions will allow us to achieve industry leading financial and operating results.

Comverse has an amazing customer list. Just this past June, representatives from over 200 customers attended our annual user forum where we present our current products, review future innovations and work to strengthen the depth and value of our partnerships. This past quarter, we added several new customers, including a number of takeaways from our competitors.

Just to highlight the few accomplishments in the quarter: We announced wins in Comverse billings and customer care in the telecom, travel and benefit card processing industries. We achieved wins and competitive takeaways in SMS text messaging, WAP gateways, InSight platform and other value added services.

It is clear; we are taking advantage of weakened competition in messaging and WAP gateways, and believe we are now clearly in the leadership position in SMS new product bookings.

Also this quarter, we secured orders in wireless personalization services, including wins with Tier 1 operators for both our Crony [ph] branded [indiscernible] and Fun Dial applications. And we announced the next generation conversed IP communication product suite and a customer win supporting Quad play services, one of several IP communication wins in the quarter.

Also after quarter close, we received initial orders from Tier 1 operators for visual voice mail, one of our new revenue initiatives. Demand for this voice mail capability is growing significantly, driven by breakthrough improvement in the overall user experience and we are clearly on our way to lead this category.

Recently, we received orders for a new wireless application such as network-based address book and photo sharing. And on the internal front, during the quarter, we realigned the expense base at Comverse to improve profitability. With the 6% workforce reduction we announced in June behind us, we are now focused on turning our attention to improvement on our horizontal processes including R&D, accelerated time to market and delivery performance. The early results of some of these actions are evident through our substantial operating margin expansion in the quarter.

Looking forward, we are continuously assessing the opportunity in the telecom industry, and have identified a very healthy pipeline of mega deals in all areas of our portfolio, whether in Billings, Messaging, WAP Gateway and IP communications, and we expect to be a partner of choice in many of these opportunities.

In addition, we are developing new revenue drivers, and our product roadmap leverages our leadership in voicemail, SMS and billings. This roadmap serves as a foundation for new revenues like visual voicemail, converged messaging, converged billings, wireless personalization services, and IP communication. This portfolio of products and services delivers high differentiation to our customers, and it provides Comverse with a strong basis for profitable growth. The new Comverse framework has started to yield initial results, and I'm confident that our actions will deliver a profitable growth in the quarters ahead.

Now let me turn to Verint. During the quarter, Verint completed its strategic acquisition of Witness Systems and increased its pro forma operating margin by 70 basis points sequentially from 10% in the first quarter of 2007 to 10.7% in the second quarter. The growth in its structured data in the form of voice, video and text is a substantial opportunity for Verint's advanced software-based analytics. These products deliver valuable timely actionable intelligence, enhancing security and improving business performance. And the recent combination was Witness System extend our portfolio and creates a new leader in workforce and enterprise optimization, and positions us as a strategic supplier of fashionable business intelligence.

During the quarter, Verint announced new customer wins in both workforce performance, as well as video security. The company is focused on the successful integration of Witness, and it is turning its attention to cross-selling and off-selling the Verint-Witness portfolio to both our customers and prospects. We expect Verint to approach 20% pro forma operating margin by the first quarter of fiscal 2008.

Now, to Ulticom. Ulticom, which provides signaling technology to the telecom industry deliver solution that are an integral part of messaging, billings, Voice over IP, location based, and wireless mobility services. In the second quarter, Ulticom's revenue at key OEM customers rebounded, and the next-generation IP, nSignia product line began to contribute to our performance. Ulticom's 52% sequential increase in revenue led the company to a 13.8% pro forma operating margin in the second quarter.

Finally, let's take a look at Starhome. Starhome helps carriers maximize their revenue from wireless roaming services by enhancing the customers' experience. This past quarter, Starhome achieved record revenue of $12.7 million, and an improvement in pro forma operating margin to 2.7%.

We made an important promise to you in our last conference call, namely that we would take the steps necessary to return the company to double-digit profitability. We believe that the second quarter results represent an important milestone towards the achievement of this goal.

In summary, I remain confident, and optimistic about the prospects of profitable growth at Comverse Technology.

Now I'd like to spend a few moments on the status of our strategic review process and our financial restatement activity. Regarding the strategic review process, we continue to refine our thinking with respect to the Comverse technology portfolio and its corporate and capital structure. As appropriate, we will provide more specific updates relative to the action we are taking. Our goal remains maximizing shareholder value.

We continue to make substantial progress towards the restatement of tax financial statements, after which our independent public accounting firm can complete the audit process. And as we stated last quarter, we expect to become current in our filings with the SEC by the end of fiscal 2007.

At this time, I will turn it to Avi who will present in more detail our second quarter financial results. Avi?

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

Thank you, Andre. Our second quarter consolidated pro forma revenue of $454 million would comprise primarily of 63.5% contribution from our Comverse, Inc. subsidiary which posted 5% year-over-year growth and a 1% sequential growth; 30.2% contribution from Variant which posted 49% year-over-year growth and 35% sequential growth reflecting the $44.5 million contribution from the recently acquired Witness Systems in the quarter, 3.8% contribution from our Ulticom subsidiary which posted 1% year-over-year growth and 52% sequential growth, and 2.8% contribution from our Starhome subsidiary which posted 24% year-over-year growth and 31% sequential growth.

Our second quarter GAAP revenue, which excludes $7.5 million in Witness Systems' deferred revenue not recognizable to purchase accounting, was $446.5 million.

On a consolidated basis, our record 12-month backlog of $848.6 million at July 31st grew by 12.2% year-over-year and by 11.8% sequentially. The majority of this backlog increase was attributable to Veriant's acquisition of Witness on May 25th 2007.

Our second quarter of GAAP loss from operations was $73.6 million, compared to a GAAP loss from operations of $24.7 million for the second quarter of 2006, and a GAAP loss from operations of $61.3 million in the first quarter of 2007. GAAP operating margin was negative 16.5% compared with negative 6.3% for the prior-year period and negative 15.1% for the first quarter of fiscal 2007.

Our pro forma income from operations was $32.2 million for the second quarter of fiscal 2007, compared to $40.7 million for the prior year period and $7.7 million for the first quarter of 2007. Pro forma operating margin was 7.1% for the second quarter of 2007 compared with 10.3% for the prior year period, an increase of 520 basis points sequentially from 1.9% in the first quarter of 2007.

Loss from operations on a GAAP basis primarily reflects the following special items: special committee investigation and related expenses, which declined significantly as we had projected to $17 million from the $32.8 million of expenses incurred during the first quarter; $15 million expense for cash in lieu of equity compensation retention payment previously authorized and disclosed in the aggregate amount of approximately $62 million; $35.9 million has been charged through July 31st, 2007 with the balance expected to be recorded in the current fiscal year ending January 31st, 2008.

Workforce reduction and restructuring charges of $14.8 million including $13.2 million related to the previously announced workforce reduction at Comverse Inc. ; acquisition related charges of $10.4 million related to the acquisition by Verint of Witness Systems including in-process R&D charges; $18.8 million in stock-based compensation; $15.3 million for the amortization of acquisition-related intangibles; and the previously discussed $7.5 million exclusion of Witness' deferred revenue not recognizable under GAAP purchase accounting.

Turning to our consolidated balance sheet, the company ended the second quarter with cash, cash equivalent, bank time deposits and short-term investments of $1.43 billion, compared to $1.83 billion at April 30th, 2007 for a decrease of $395.7 million. This decrease is primarily due to the following two factors. During the second quarter, the company purchased $293 million in convertible preferred stock from Verint, which used the proceeds to fund in part its acquisition of Witness Systems. Also during the quarter, Verint used $40 million paid down debt assumed in conjunction with the Witness acquisition.

Verint ended the second quarter with debt of $610 million in addition to Comverse Technology's outstanding convertible debt of $419.6 million. In closing, we are making good progress on the restatement of our past financial statements and expect to become current in our filings by the end of the fiscal year.

We will now open the line for questions. Operator?

Question And Answer

Operator

[Operator Instructions]. Your first question comes from Tom Roderick.

Tom Roderick - Thomas Weisel Partners

Hi, guys, good afternoon. I was hoping that you could go into a little more detail on the backlog. You indicated that the majority of it came from Witness itself. When you talk about the Witness backlog contribution, is that entirely maintenance support agreements, is there any services or license component of that? And then can you just confirm that organically backlogs, even absence of Witness would have been up quarter-over-quarter? Thanks.

Andre Dahan - President and Chief Executive Officer

Tom, we are not going to talk, obviously we have time for this.

Tom Roderick - Thomas Weisel Partners

Okay. Can you provide any commentary though regarding the statements that the majority of it was from Witness that absence Witness; that would have been up?

Andre Dahan - President and Chief Executive Officer

Tom you can... as you know Witness pre-acquisition was doing above $59 million, $60 million per quarter. So, you can't assume that the majority of the backlog from strong Witness, but as I mentioned in my comments, CNS has a significant growth in bookings this past quarter as well, you know we won't drill into a lot more details than that.

Tom Roderick - Thomas Weisel Partners

Okay, fair enough. And just shifting gear to looking at the commentary you've had on Visual Voicemail. Certainly more talks than we have heard about that in quite a while. Can you comment on what you are seeing from an industry transition standpoint, the iPhone release obviously had visual voicemail, well, not being from Comverse, is that something where you are seeing a lot of inbound traffic from Tier 1s across the globe, just any incremental commentary you can add there would be helpful.

Andre Dahan - President and Chief Executive Officer

Clearly, as I indicated in my comment, we view visual voicemail as one of the revenue. It's clearly iPhone caused the... an awareness increase in the marketplace, but we are... first of all, as I mentioned in my comments, we got orders from Tier 1 operators, but we have interest from both iPhone and non-iPhone customers among the operators who are seeing this as a new and opportunity to deliver end user services that have significant value, and you know we've had capability in the voicemail extension quite some time already.

Tom Roderick - Thomas Weisel Partners

Right. Thank you, Andre.

Operator

Your next question comes from Daniel Ives.

Daniel Ives - Friedman, Billings, Ramsey & Co.

When you look at backlog I know you can get too much granularity, but was backlog organically strong... much stronger than you guys were expecting it to be?

Andre Dahan - President and Chief Executive Officer

Daniel, as we mentioned, the majority of the backlog improvements is the result of the Witness acquisition and the addition of the Witness business to ours but... and also the stronger product bookings sequentially at CNS. That's about all the colors I can give you at this point.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Okay but just I mean, I know you backed out Witness unless there was nothing anomalous, I mean backlog still would have been up organically pretty nicely and even year-over-year so. On operating margin, I mean there was a significant jump there; I mean just under 6% headcount. Could you just... are there going to more cuts coming? Is that just something you guys could discus, I mean that's a pretty big jump which is a positive. I just want to see if you could just explain that, how you can get such a huge jump in a quarter?

Andre Dahan - President and Chief Executive Officer

Sure. If you recall in my comments in the previous quarter what I stated that we are aiming at double-digit operating margin within the next few quarters. We... in terms of performance in Q2, I can tell you the contribution to the improvement comes from primarily two sources; a) some of the improvements come from the 6% savings but it's very early and it's not the entire improvement, but some of the effects of the savings is in the quarter and the second, very substantial one as well, is the product mix. The product mix in any one quarter is going to tell a story as far as contribution to margin. We are very pleased with the performance this quarter, so we've had a little revenue growth and a product mix that does favorability to product versus services, and the impact of the savings are reflected in the... in what I consider a good first half expansion of the operating margin from 3% to 6.7%.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Okay and I understand you being modest, but I mean where it was coming, it was a pretty good pretty good turnaround both in margins and even backlog organically if you back it out, and anecdotally it seems that you are talking light more positive than you were in the previous call?

Andre Dahan - President and Chief Executive Officer

Daniel, let me just --

Daniel Ives - Friedman, Billings, Ramsey & Co.

No I am just calling a spade a spade.

Andre Dahan - President and Chief Executive Officer

No, I really appreciate. The previous call honestly I was onboard one day of the previous quarter, so I was a lot more cautious a), b) at this point I see some positive sign, c) we took some action, which we knew where the right type of actions to be taken, and as you heard in my comments now, I'm committing to operating margin, operating double-digit operating margin within the next couple of quarters not the next few quarters.

Daniel Ives - Friedman, Billings, Ramsey & Co.

You I see, did you say operating margins next quarter, I know you are joking, okay.

Andre Dahan - President and Chief Executive Officer

Next couple, Daniel.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Come on... okay. Should you measure rationally the mega deals that's the first time that you guys have talked about something like that. It seems very positive. Just what's happening out there with those mega deals?

Andre Dahan - President and Chief Executive Officer

If you recall in my comments, yes one is I pointed to some deterioration of spend in the telecom industry. So, this caused me to go back inside, and we took if you want step or processing where we stood in terms of our pipeline looking at the future... looking at the market opportunities that are available to us, and we did a broad-based assessment of what I call mega deals, which are deals in... I'd say $10 million and up, and we see that the opportunity is very significant, the deals in which we are likely to participate, and hopefully to win a big percentage of this deal. This was a way of measuring the health of the business overtime, and coming back, and really getting assessment of where at the top line though I see revenue growth potential for the CNS business. And in the lot of way I am affirmative on that, suggesting that if the industry grow, we will probably grow above industry because we have a strong leadership position in the industry.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Hey guys, good job. Thanks.

Operator

Your next question comes from Thomas Ernst.

Thomas Ernst - Deutsche Bank Securities

Hey gentlemen. Thank you. First question for you Andre, I think there is some chatter out there as to the inherent profitability capability of the business that the gross margins. First question on that, looking backwards, the company when it was more concentrated to voicemail was posting 60% gross margins. Has there been anything structurally that changed in terms of the mix of the business that you think has brought in lower profitability components, things like a much higher service attach rate or more hardware, anything like that or do you think the business is kind of stay to similar mix?

Andre Dahan - President and Chief Executive Officer

I think, you are bringing to number of Tom, you're pointing to number of areas like product mix over time what is likely to change, product contribution to the quarterly make up is likely to change because of the various level of market majority in voicemail in certain areas versus billing lay. I have mentioned to you even last time that is one of our growth engine. So, yes there are definitely some changes that occur all the time, but I don't think that they are pointing us down. In fact you know, I think with the right discipline, with the right action around reengineering some of our process, some of our delivery capability, and the R&D environment, we'd be able to effectively manage to these changes of mix by realigning, rebalancing resources stored in a more productive areas of the business on an ongoing basis. Basically, my markers, the markers that play critical for me was a) to first of all, go after the low hanging fruit in the business; two, make sure the opportunity in the market that we are playing exist and exist for growth; and three, then looking at the alignment... realignment of our capabilities based on these market growth drivers. So, I know I didn't give you a complete precise answer to the mix. I mean the company also was known in the past to have delivered double-digit operating margin. However, we never sustained that. We are trying to build this expense base to a level where we can sustain it, use the baseline to start from and sustain it, and improve it from there.

Thomas Ernst - Deutsche Bank Securities

Okay fantastic. Maybe one point of clarification within that.

Andre Dahan - President and Chief Executive Officer

Sure.

Thomas Ernst - Deutsche Bank Securities

There is one voice out there that's been vocally spreading. I think misinformation maybe, they just don't understand financials, has been saying that the voicemail... messaging business was never more than a 30% gross margin. I guess, my guess would be they are confused between contributing margin... contribution margin and gross margin, am I wrong there or?

Andre Dahan - President and Chief Executive Officer

No, you are not wrong, you are absolutely right. That's absolutely incorrect. I must tell you, it's totally incorrect. The voicemail business had a high gross margin in the past, and what you are referring to is probably something closer to the contributing margin.

Thomas Ernst - Deutsche Bank Securities

Okay.

Andre Dahan - President and Chief Executive Officer

That's only measured internally by the way.

Thomas Ernst - Deutsche Bank Securities

Fantastic. One more question following up on the previous question, and then I'll let others.

Andre Dahan - President and Chief Executive Officer

Sure.

Thomas Ernst - Deutsche Bank Securities

You mentioned that you think you can outgrow the industry, and looking forward we are expecting growth. I think if you do the organic calculation on backlog. We are around kind of flattish. Is that happening right away or there is still some transition elements you think before you get that growth recovery?

Andre Dahan - President and Chief Executive Officer

I do believe there are some transitions. I think clearly it's going to... the industry will tell us whether it's growing at a faster pace, or not. I do believe that we have found with this... within the industry areas where we shine, and areas where we have a definite strategic advantage even with new product and services. I don't want to minimize the... we do think that's even in our core products there are extensions that we can exploit, and we are doing everything to put some rigor behind it to be able to go and attack these opportunities, and literally go after the competitors in the space.

Thomas Ernst - Deutsche Bank Securities

Thank you again.

Andre Dahan - President and Chief Executive Officer

Thanks, Tom. Thank you.

Operator

Your next question comes from Daniel Meron.

Daniel Meron - RBC Capital Markets

Hi, Andre and Avi, congrats on the improvement in the operating margins so quickly. Andre, maybe you can provide us with some more color on the spending patterns within the Comverse Network Systems business. My checks indicates that the CNS count was subdued [ph], but when you take a look at traffic, the subscriber count, adoption of some application, it seems like you to be in the rise. Is there some under spending going on by some carriers that you are seeing, if it is something that has picked up in certain areas or is it something to do with the execution from Comverse. If you can just give us more granularity there and then when do you think, if it is understanding with some more softness in the industry, when do you think that this should turnaround, and what will be the triggers for that?

Andre Dahan - President and Chief Executive Officer

Your attempt to make a call Danny on the industry turnaround, I think my data kind of reflect some of the data coming out of the major bank about deceleration in certain area of CapEx, also the growth maybe slowing down in Western European market, North American market wireless, but on the other hand I see growth in the emerging market. Now our focus is really identifying our best growth engines and aligning those to the market opportunity that we believe are growing. We have tremendous amount and a great success with our prepaid billing offer and even with the Kenan postpaid offer and we believe that will grow in... with billing, which we are making a bet off, which means where are the money being spent, the money is being spent with some major infrastructure capability and the money is also being spent with new types of services. Services that are either providing the operators with new ARPU drivers and we see some... that's one of the reason we see quite a bit of demand for visual voicemail and this is really true among almost all operators.

We see some demand on personalization capability and new type of services. We do believe that our converged messaging is another strong area of growth, because what we've seen in various mature market in SMS, so clearly it's hard to point to one, but I would say services that are driven by user experience is one, and two, billing because it's a must-have infrastructure component and where with the reengineer where they are competing and we are short-listed on every one of the large opportunities around the globe.

Daniel Meron - RBC Capital Markets

Great, thanks Andre. And I think in the past, you mentioned that you think that the growth in the industry or at least for Comverse could be in the double-digits down the road, maybe not now in the application giving space in general, low to mid-teens. Now that you had few more months in the industry and begin around the Comverse product groups, so do you still think that is a sustainable long-term growth that you can achieve?

Andre Dahan - President and Chief Executive Officer

I never said that by the way, but...

Daniel Meron - RBC Capital Markets

I'm sorry.

Andre Dahan - President and Chief Executive Officer

Good try, Danny, but I would say that there is nothing assuming the industry growth, there is nothing preventing us from growing faster than industry. Again I want to make sure. We have a leadership position in quite a few areas of this space, and I think we can leverage that to a few points above the industry growth. So that's kind of my motto on that. I did say, however, many times that even if the... we were to grow at the modest level we are standing on the double-digit operating margin commitment.

Daniel Meron - RBC Capital Markets

Okay. Thank you, Andre. I'll get back...

Andre Dahan - President and Chief Executive Officer

Have a nice holiday. Thanks.

Operator

Your next question comes from Shaul Eyal.

Shaul Eyal - CIBC World Markets

Thank you. Hi. Good afternoon guys. Two quick questions on my end. With respect to the InSight product on the voicemail front, where do we stand on the upgrade cycle? Is it basically over now?

Andre Dahan - President and Chief Executive Officer

No. I don't think... no, Shaul, Andre, how are you?

Shaul Eyal - CIBC World Markets

Good. Thank you.

Andre Dahan - President and Chief Executive Officer

I would say that roughly 40% has gone through the update cycle. I think we give markers along the way on that, but I think it's a great platform and this is one of the extension platform for us on the roadmap, and it will allow us to create new capabilities around voicemail, such as visual voicemail as one of... the one I mentioned today.

Shaul Eyal - CIBC World Markets

Fair enough. Andre, how would you describe the morale within Comverse, whether in the U. S., whether in Israel, whether in Wakefield?

Andre Dahan - President and Chief Executive Officer

I think you know honestly it's... I can answer... if I wanted to dock the question and look the other way, we do have some morale challenges. I've recognized those. We've... again I can't ignore the history of this company, in particular the last 18 months. So, my job is to spend, to expend the lot of efforts to restore the confidence that we are an employer of choice that we are leader in the industry, and that it is worthwhile working for us. At the same time, we will have changes, and the last workforce reduction caused a lot of morale questions around the subject on whether we are going to see more of that or not. But that's a question that I grapple with on an ongoing basis and the team, the leadership in Tel Aviv has the same thing. But I do believe that we see improvement, and I do believe that as we share with most of the people when we communicate the direction and the strategy that we are sharing with the people, they understand that we are here to stay, that don't have a plan to sell CNS, that we are about to recapture any leadership position we may have lost in the industry, and get the people excited to work for Comverse. I mean that's a... but on the other hand, I am cognizant of some of the buckets of morale challenges, but we are working on that. And I have to say, if I was to just measure morale by turnover number, we are in line with the industry. I am not anywhere and I am probably somewhere in the median of the industry. We are not looking like a worst case scenario. But there was a lot of press written and as you know in Israel there is a lot of visibility to the press and they believe so.

Shaul Eyal - CIBC World Markets

Got it. Thank you very much. Good luck. Good luck.

Andre Dahan - President and Chief Executive Officer

Thank you. Bye, bye. Happy New Year.

Shaul Eyal - CIBC World Markets

Thanks.

Operator

Your next question comes from Larry Harris.

Lawrence Harris - Oppenheimer & Co.

Yes. Thank you. Congratulations on the sequential improvement. A follow-up to Shaul's question regarding how many customers do you have right now for InSight, and if you could provide a breakdown on the geographic basis in terms of revenues for the quarter?

Andre Dahan - President and Chief Executive Officer

Well, InSight is definitely a growing platform. I don't have exact numbers of customers honestly, but the distribution is uniform, is in excess... last quarter I think we announced something when we passed a 100 on the InSight customer list. I think that we were to overlay that to our installed base, it probably overlays in a fairly uniform way with the Trilog platform, the traditional platform. So, I don't have that data here Larry, I would directly answer it. But again about 40% of the base is InSight right now.

Lawrence Harris - Oppenheimer & Co.

Understood. And the geographic mix?

Andre Dahan - President and Chief Executive Officer

I don't... I think the geographic mix will follow the geographic mix of our Trilog, which we'd say suggest very strong in Europe and basically, where we have... frank, I don't have the data in front of me Larry on geographic mix and InSights.

Lawrence Harris - Oppenheimer & Co.

All right. Thank you.

Operator

Your next question comes from Scott Sutherland.

Scott P. Sutherland - Wedbush Morgan Securities

Great, thank you. Good afternoon and good job on the margins.

Andre Dahan - President and Chief Executive Officer

Thanks, Scott.

Scott P. Sutherland - Wedbush Morgan Securities

Wanted to do a follow-up on the last question on InSights what kind of success are you seeing for attached applications to InSights, I think you guys are seem like wanted to add the flash applications to fill your 50% of your customers couple of quarters ago?

Andre Dahan - President and Chief Executive Officer

Yes, I think that's what we mentioned, yes Scott, I am sorry I don't have more... a lot of specific on that and that's kind of where you could look at, I think it's... of the InSight installed base over 60% is two or more applications, and to consider visual voicemail that's another strong extension that we are likely to see pick up. And I think it's an interesting dynamic here where we are really working on certain situations where; a) because we have InSight in place, we are pulling in with visual voicemail and in certain cases where I am hopeful is that we will take away from competitors some of the account, put InSight in with your visual voicemail on that.

Scott P. Sutherland - Wedbush Morgan Securities

Okay. The iPhone has been up over several months now and there has been talk about increased interest given by its enhanced services, how do you see the market environment on that front of the value-added services and CapEx environment for the back half of this year?

Andre Dahan - President and Chief Executive Officer

I definitely; a) I do see clearly a growing interest in iPhone, and in the iPhone extended services, resident iPhone as a product being specific to visual voicemail, which in a lot of ways that I've started talking to equipment manufacturer on the handset side to start thinking about potential partnership. So, we are going to see hopefully a pool for a new type of service. We took stabilize [ph] voicemail in a much more user friendly fashion. What it does to industry CapEx, I can't project that honestly. It's a question is a going to be with, and also it's going to be with the operators and the carrier, the wireless carrier. I have to take in consideration that there is some growth for us even if the industry grows modestly.

Scott P. Sutherland - Wedbush Morgan Securities

Don't...

Andre Dahan - President and Chief Executive Officer

Linearly linked to the CapEx numbers.

Scott P. Sutherland - Wedbush Morgan Securities

Okay. And just a last question, with the... during converts in the lower cash balances, can you give us a little bit color kind of where interest income would fit in... where it could be in future quarters here?

Andre Dahan - President and Chief Executive Officer

Could you repeat the second part of the question, I am sorry, Scott.

Scott P. Sutherland - Wedbush Morgan Securities

Just with the... convert with Verint's in the lower cash balances. Can you guys give some color of where interest income lies this quarter and maybe in coming quarters?

Andre Dahan - President and Chief Executive Officer

No. We really can't provide much on that, it's our... I don't want to get into any guidance on so granular on that.

Scott P. Sutherland - Wedbush Morgan Securities

And I'm not sure, you did it, can you talk about with this quarter was?

Andre Dahan - President and Chief Executive Officer

We decided not to release information below the operating income line. So I prefer not to go there.

Scott P. Sutherland - Wedbush Morgan Securities

Okay. I understood. Thank you.

Andre Dahan - President and Chief Executive Officer

You're welcome.

Operator

Your next question comes from Sterling Auty.

Sterling Auty - J. P. Morgan

Yes. Thanks. Hi guys. I just wonder if you could characterize with the changes that you are making both headcount and I would think that you are down, how far along do you think you are in terms of the changes, structural changes that you want to make for the company as a whole, are you 25% down, 50% down where are you in the process?

Andre Dahan - President and Chief Executive Officer

I honestly don't want to, I mean as much as; a) we took the right type of early actions, but you know actually we are working on an internal plan on an ongoing basis to really get to develop some financial flexibility that's going to allow me without a shattering changes realign the resources, address the key reengineering fundamental issues that they may have built into the business and get to a point where I can start moving resources from one place to the other, in a way that keeps me agile and not through major plans as we've seen. Another one I minimize the fact that you know, I clearly won't need to be in a position where by developing some financial flexibility I can invest in the future of the company, I can invest it in an innovation engine. This company has planned its entire like innovating there's no reason why we could not continue to do so. So, the type of actions that we are likely to take are more into process that as I have mentioned the first time, and we are definitely leaning behind those optimizing R&D, starting to think about optimization of our delivery process being from the point of getting a purchase sold at the point of delivery to the customer and acceptance being a lot more rigorous about this process. So, there is a lot of thing shifting that are not visible to the external market, but I clearly think the notion that the senior management team in Tel Aviv, and myself with that the holding team are working on continuously. We've agreed to the kind of the template that's going to allow us to move more a lot swifter than we have in the past.

Sterling Auty - J. P. Morgan

Okay. And the comments that you made, that CNS have significant bookings improvement in the quarter. How much of that is due to macro factors, and how much of it would be attributed to perhaps improved execution on your part?

Andre Dahan - President and Chief Executive Officer

That's very hard for me to see that. I don't think that they were. Honestly, let me put it this way, between the first quarter and the second quarter, I do not believe that they were macro factor of significance that would have impacted the bookings. So, we will take the credit for the execution, Scott, as much as I can say, but I think we can point fairly good solid growth in booking sequentially.

Sterling Auty - J. P. Morgan

Okay. And I have got a number of... already from investors that they are a little confused about the whole backlog things. Are you suggesting they found an answer to an earlier question that we should take the total backlog, and that back out what you say $59 million or $60 million from Witness do estimate or?

Andre Dahan - President and Chief Executive Officer

Sorry Scott, to interrupt you no, no, no, I was referring to on this $59 million to $60 million is an entire quarter... an entire quarter of revenue to give you some guide post into how Witness performed, but no the backlog was nowhere close to that.

Sterling Auty - J. P. Morgan

Okay. So, again...

Andre Dahan - President and Chief Executive Officer

The Witness backlog was not as high as that.

Sterling Auty - J. P. Morgan

Okay. So, Witness backlog was lower than $60 million, because everybody is still wondering whether the backlog was up, down, or flat sequentially next quarter?

Andre Dahan - President and Chief Executive Officer

Actually, you know, Sterling I would rather check these and that's Avi, I want to ask Avi for that. I don't... Avi, go ahead.

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

We believe that it was higher than a $60 million, Sterling.

Sterling Auty - J. P. Morgan

Okay.

Andre Dahan - President and Chief Executive Officer

Okay

Sterling Auty - J. P. Morgan

All right. Fair enough. Thanks guys.

Operator

Your next question comes from Stan Enders [ph]. Mr. Enders your line is open. Hearing no response, we will go to our next question, which is from Yar Rener [ph].

Unidentified Analyst

Hello. This is Yar here. My question is actually been answered. Thank you.

Andre Dahan - President and Chief Executive Officer

Thanks Rener [ph].

Operator

Your next question comes from Larry Berlin.

Larry Berlin - First Analysis Corp

Actually my question was just answered. I'll so listen not to avoid, have a great New Year.

Andre Dahan - President and Chief Executive Officer

Sure, thanks.

Larry Berlin - First Analysis Corp

Okay. Bye-bye.

Operator

Your next question comes from Jeff Kvaal.

Jeff Kvaal - Lehman Brothers

Yes. Thanks very much. Andre, my question is about product mix of the solution variations here. Would you be able to tell us a little about what products are higher operating margin portfolio and what is lower? And then secondarily, are you... whether you consider to be a normalized place in terms of product mix or should we expect to be significant variation from quarter-to-quarter? Thanks very much.

Andre Dahan - President and Chief Executive Officer

Yes. Sure, Jeff. I think in general, the mix in any one given quarter has been different from the other. But I can't give you too much the specificity about the higher profitability by product; in fact, we are working on an ongoing basis to get the point where we have full understanding of that. But in general, I mean it's going to depend on the content of services versus product revenue, license revenue. So, we've had a good balance this quarter. But again, I don't want to mislead, I think the contribution came from two points. One is the product mix being one. And two, some of the early savings actions we took in the quarter.

Jeff Kvaal - Lehman Brothers

Okay. Well, as a follow on there then Andre would be, in thinking about the next leg in your margin improvement, should we be thinking about further improved mix or is the next cut off, primarily about your OpEx reduction campaign? Thanks.

Andre Dahan - President and Chief Executive Officer

I think, I don't want to trying to provide too much as clearly again the mix variations are almost unpredictable quarter over time. So, where I... remember we are... what I am trying to do is get to the fixed cost base of the company, regardless of the mix based on various contribution of the product lines, are put in place sufficient, financial discipline and established a baseline for the fixed cost. So, we can count on modest revenue growth to achieve sustainable double-digit operating margin, which is absolutely a must, one. And once we reach that cruising altitude to build through the second set of improvements to our business, hopefully, also counting on an industry that's growing a little better than what we see right now or what we have seen over the last few months. So that's kind of the story. But what I am not doing either is counting on the favorable product mix every time we do make something happen.

Jeff Kvaal - Lehman Brothers

Okay. Should we be preparing ourselves for quarter-to-quarter volatility perhaps something like a couple of 100 basis points in the operating margin depending on mix?

Andre Dahan - President and Chief Executive Officer

I really don't want to comment on that because I think we are... I was kind of clear if you consider that I provided some guidance on operating margin. I stated double-digit within the next couple of quarters, implying clearly that I'm taking it in consideration that we may have variability on the way there, but the question of how much variability or should we expect some, I don't think I can answer that question at this point.

Jeff Kvaal - Lehman Brothers

Okay. Thanks very much Andre.

Andre Dahan - President and Chief Executive Officer

Thank you.

Operator

You have a follow up question from Daniel Ives.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Yes, Andre I just wanted to clarify something, when you talk about CNS, we're here to stay. Could you say the amount were not for sale? Look, I just... it's important to just clarify this, right, on a call?

Andre Dahan - President and Chief Executive Officer

Dan, I think there were enough rumors about every component of the business that were written in various press around essentially in Tel Aviv in Israel, and it clearly... that has contributed to a morale challenge entirely, because there were people hear that. So no, CNS is not for sale. I don't have the plan right now to sell CNS. There are no hidden plans that I carry that only myself and a few people know about. However, again I repeat the statement of the strategic review process is ongoing and I'll provide as much update as possible when appropriate. I mean that's kind of the position.

Daniel Ives - Friedman, Billings, Ramsey & Co.

So just to clarify, yes, there is no plan to sell now but the strategic review is ongoing, in that I mean that's an ongoing thing right, you've just talked about?

Andre Dahan - President and Chief Executive Officer

Daniel, I think it's ongoing I think you know exactly the financial position of the company relative to the restatement and I'll repeat CNS is not for sale.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Okay. So you are saying that CNS is not for sale, and that something regardless of the strategic review?

Andre Dahan - President and Chief Executive Officer

I never said that the strategic review process would stick in consideration almost to everything, the capital structure of the company, the corporate structure, the various businesses of the company, but I have to say the... we are in a leadership position in CNS. It is a core asset for Comverse Technology and where we stand behind this asset very strong. So I'm not at this point prepared to discuss what else we may do with the various assets of the company, but we certainly will keep the market updated when the time is right with any of the asset.

Daniel Ives - Friedman, Billings, Ramsey & Co.

Which will include CNS?

Andre Dahan - President and Chief Executive Officer

Well, Danny.

Daniel Ives - Friedman, Billings, Ramsey & Co.

No. It's important to clarify, right?

Andre Dahan - President and Chief Executive Officer

It is important we are not... we never mentioned ever that we were going to sell CNS.

Daniel Ives - Friedman, Billings, Ramsey & Co.

But then you've never, okay. I just wanted to understand in the context of the strategic review ongoing, as you said all options are on the table. Yes, I am just trying to put the two together to gain some?

Andre Dahan - President and Chief Executive Officer

We did say that we are assessing every aspect of the business, the corporate holding, the capital structure, the various companies in which we have investments, and in that context all of the assets are being considered. However, I will tell you we have not considered selling CNS.

Daniel Ives - Friedman, Billings, Ramsey & Co.

To date. Okay. Thanks.

Andre Dahan - President and Chief Executive Officer

Welcome.

Operator

Your next question comes from Eyal Ofer [ph].

Unidentified Analyst

Thanks. Congrats on the turnaround in the operating margins. I just have a quick question, can you just provide me with an update on the fully diluted share counts for the quarter? Thanks.

Andre Dahan - President and Chief Executive Officer

Just hold on, Avi.

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

Sure, the fully diluted share count for the quarter was approximately 209.3 million shares outstanding.

Unidentified Analyst

Okay great. And all the other questions I had were already answered thanks.

Andre Dahan - President and Chief Executive Officer

Thank you.

Operator

Your next question comes from Tal Liani from Merrill Lynch.

Andre Dahan - President and Chief Executive Officer

Hey Tal.

Tal Liani - Merrill Lynch

Oh, here I go, I was on mute, I am sorry. Sorry, I turned late, so you may have answered this, but can you give a status what's the current status of your filing? And also you made comments on product mix which make me to assume, just assumption that voicemail did not grow much or even declined this quarter in terms of recognized revenues because overall CNS was only 1% up sequentially and 5% year-over-year. So you also made a comment I think that penetration of voicemail is about 40% currently and the question is what's stopping really voicemail from growing to 100% penetration. What is there in the upgrade cycle that prevents some carriers from going all the way and replace this set of old technology with your new InSight? Thanks.

Andre Dahan - President and Chief Executive Officer

I just want to say what we say this InSight represent 40% of the total installed base of voicemail. That's what we said and that 40% we... 60% of it has 2 or more applications attached to it. As far as the product mix, it's impossible to come to the conclusion you are coming to, and we have variability in the product mix on an ongoing basis, I can tell you that when I... we do an assessment of mega deal, we see there are some major vast voicemail messaging opportunities. So I couldn't provide you a lot more colors than that as far as our product mix on an ongoing basis for a value of that mix over time routed to share of the market. As far as the filing, I'll ask Avi to give you some data on that.

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

Sure. We've said that we expect to be a current filer by the end of fiscal year. We've made nice progress on our restatement and we still believe that we'll be fine by the end of the year.

Tal Liani - Merrill Lynch

Now, just going back on the revenue question on product mix. So if 40% of your installed base is InSight that means that 60% is Trilog. So the question is what prevents the 60%... there is certainly... even if it didn't slow down, the fact that CNS is only growing 5% year-over-year and 1% sequentially implies that InSight had major deceleration when I look at the trailing four quarters, when I look at sort of year-over-year trends in '06, versus '05, this is '07. So regardless of the right number, there is certainly deceleration in sales of InSight versus what we've seen in the prior two years. So the question is if 60% is still Trilog of the installed base, why is it starting to decelerate so early? What prevents it from... what prevents customers from upgrading to Trilog?

Andre Dahan - President and Chief Executive Officer

Well I think there are a number of things. They are number [ph] of mail and life on equipment that has not been reached yet. There are a number of factors. I think what's more important Tal here is the overall market... worldwide market in voicemail probably doesn't grow as fast as it used to grow because of various market saturation. Now with that said, we are still seeing opportunity for end of life, opportunity for upgrade, and now what I consider some opportunities that are driven by new applications, new services, visual voicemail being one of the new countless potential, and judging by the early market interest and the first few orders that we've got, I have to say we definitely are going to lead the category in that space, but if you kind of want to come to a conclusion that just as the overall voicemail market is growing slower, I think its driven also by the macro marketing of voicemail around the globe at various places.

Tal Liani - Merrill Lynch

Great. Thank you.

Andre Dahan - President and Chief Executive Officer

Thank you.

Operator

: Your final question comes from Sterling Auty.

Andre Dahan - President and Chief Executive Officer

I think we have two more on the line.

Sterling Auty - J. P. Morgan

Hi it's Sterling again. I got two follow-ups. First is related to those new services that you mentioned. Could you just generalize for us what the average new opportunity for those new services look like versus doing adherence and let's say the traditional voicemail space? That's number one, then I have a follow up.

Andre Dahan - President and Chief Executive Officer

No I can't explain that.. I can't give you much data on that. First of all, on visual voicemail as you know, these are now could become very large deployment, because we are talking about large operators that are... heard about the capability, are looking at the deployment of iPhones and the usability of the service, and now are looking to potentially roll this out and deploy that on various devices, not necessarily iPhones. I can't give you, I mean, it varies and it will vary based on the number of adoption around these services. So, I can't give you more color than that.

Sterling Auty - J. P. Morgan

Okay.

Andre Dahan - President and Chief Executive Officer

As then what was the second part of the question?

Sterling Auty - J. P. Morgan

Yes. The second question actually was related to the comment about the... you mentioned 209 million shares, is that just shares outstanding? That's not before you do with the share count is that right?

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

That's diluted, yes.

Sterling Auty - J. P. Morgan

Now, would that be for GAAP purposes, given a GAAP loss, so that would, probably would be in more like 230?

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

That's for pro forma purposes, where we had income. So, that's the diluted share account.

Sterling Auty - J. P. Morgan

All right. So it's 209?

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

Yes.

Sterling Auty - J. P. Morgan

All right. Thank you.

Avi T. Aronovitz - Interim Chief Financial Officer, Vice President - Finance and Treasurer

Thank you.

Andre Dahan - President and Chief Executive Officer

Think we have a last question or?

Operator

Yes, sir. Your final question comes from Daniel Meron.

Daniel Meron - RBC Capital Markets

Yes. Thanks Andre for taking the question. Couple of quick things, first of all, can you describe a little bit more in detail your activity in the IPTV market? It sounds like you guys had some good inroad so far and if you can just give us some color there and what exactly you are looking to provide in that segment? And then just a quick follow up to that.

Andre Dahan - President and Chief Executive Officer

Well, in general in the area of IP communication, we've been very active in Europe as you know. And we have recently won a European IPTV deal. In general, we are focused on not necessarily all of the mentioned, but we are focused on triple play primarily, but have been involved in a few quad plays most recently. And we are experiencing a bit of success in the delivery of these services. I mean that's all I can provide you. So, we can... Danny, I can send you some specific on any one opportunity that we have disclosed, if you want.

Daniel Meron - RBC Capital Markets

Sure. But --

Andre Dahan - President and Chief Executive Officer

We have a variety of partners in this space, by the way.

Daniel Meron - RBC Capital Markets

Right, yes. But from the standpoint of traction, I mean you have an eccentrics in your ability, increased your IMS portfolio, and all that. Where do you stand today versus say a 6 months ago, 12 months ago. Did you see better traction, better deal volume, better margins in that aspect, if you can just give a little bit more color?

Andre Dahan - President and Chief Executive Officer

We do see more traction. We see a little more market demand. We saw a number of operators first of all, looking at more mobile conversations, and entering the IPTV space. We see a little more demand in that. Maybe in some cases as an offset to voice fixed line type of opportunities.

Daniel Meron - RBC Capital Markets

Okay. And then final one from me, on the... once you do have... once you are current with your filings with the SEC towards the end of the fiscal year. Would it be fair to assume that's right after that you would go after re-listing in the National Exchange and if so, what would be the timing for that?

Andre Dahan - President and Chief Executive Officer

Yes, absolutely. I mean you have people here in the room are laughing. As you can imagine, we are anxious for a number of reasons; a) becoming re-listed is kind of an implication that we are back in business as a normal company, as a technology company. We can address equity-based compensation for our employees I mean there are number of substantial positive factor. We can't come out and be more transparent as far as the market is concerned, as far as our business, so clearly yes.

Daniel Meron - RBC Capital Markets

And a timing for that following the... being current is a matter of weeks, months sequentially?

Andre Dahan - President and Chief Executive Officer

I would say this is probably more a matter of weeks than months to do that first off.

Daniel Meron - RBC Capital Markets

Okay.

Andre Dahan - President and Chief Executive Officer

I am sure the lawyers are going to slap me this evening on that so.

Daniel Meron - RBC Capital Markets

That's their job, okay. Thank you, Andre and Avi, good luck going forward and Shanat Yovel.

Andre Dahan - President and Chief Executive Officer

Thank you, Shanat Yovel. Let me try to close this, I really hope that during this call we were able to provide you a little more visibility on progress we made this quarter towards achieving our near and mid-term objective of significant improvement and profitable growth, and business momentum at Comverse Technology. I strongly believe that the results this quarter are reinforcing all of our confidence here for sustained profitable growth. The achievement of 6.7% pro forma operating margin at Comverse, Inc. and the 7.1% on the consolidated basis is the first half, but it is a very important first half. We are now on track for double-digit operating margin at Comverse Inc. in the next couple of quarters and as a sustainable base for our future improvements.

We are committed to achieving industry leading results, committed to maximizing shareholder value through a thorough and reasoned review of our portfolio and structure. We are committed to developing an organization that's rich with talent, valuing its people as a core asset, and committed to partnering with our customers to ensure their long-term success. Our value equation remains our commitments to our shareholders, to our customers, partners and employees to deliver high operational performance and world class product in all the markets we serve. We want to thank you this afternoon for your participation and wish you a very good evening. Thank you very much.

Operator

That concludes this evening's teleconference. You may now disconnect.

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Source: Comverse Technology, Inc. F2Q07 (Qtr End 7/31/07) Earnings Call Transcript
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