Is Comverse's Value About to Be Unlocked?

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Includes: CMVT, ULCM, VRNT
by: Aaron Katsman

Israel Opportunity Investor has mentioned the intriguing potential buying opportunity presented in Comverse Technology (NASDAQ:CMVT) on numerous occasions. The huge cash position along with large positions in publicly traded Verint Systems (NASDAQ:VRNT) - the jewel of the group- and Ulticom (OTC:ULCM), have made Comverse one of our favorite Israeli plays.

We have previously mentioned that we thought the the company will sell-off its holdings, and it appears that this strategy is starting to take place.

On Thursday, the Israeli financial daily Globes reported that Ulticom has retained investment bank Jefferies and Co. to review strategic alternatives. The article also quoted Comverse president and CEO Andre Dahan, who said:

This is the first stage of my strategy. Businesses that are not synergetic with our business can be sold. Although we emphasized in the announcement that there is no deal yet, and that Ulticom’s board might not approve any deal, but this is definitely a step towards the sale of the company.

In previous articles we have discussed that a potential breakup value of Comverse could be worth around the $30 level. Investors looking for an interesting value play, may want to take a long look at Comverse as it appears that the breakup strategy is about to begin.

Disclosure: The author’s fund has a position in CMVT.PK, VRNT.PK and ULCM.PK, fund has no position in any other stock mentioned as of April 18, 2008.