Comverse Technology, Inc. was a technology company located in Woodbury, New York in the United States, that developed and marketed telecommunications software. The company focused on providing value-added services to telecommunication service providers, in particular to mobile network operators. Comverse Technology had several wholly or partly owned subsidiaries. The name "Comverse" is a fusion of the words "communication" and "versatility".
The company was founded in 1982, and went public on the Nasdaq Stock Market in 1986. Led by co-founder and CEO Jacob "Kobi" Alexander, the company originally specialized in centralized hardware/software systems for voice and fax messaging and sold them to telecommunications companies and other large enterprises. Much of its funding came from Israeli government subsidies and tax credits provided to research and development for hi-tech firms. By the mid-1990s, one of its most successful products allowed legal authorities and intelligence agencies to record and store data collected from intercepted communications. Starting in the late 1990s, Comverse's voice messaging software became its main product and the company grew rapidly with the surge in mobile phone use, passing the $1 billion mark in revenues. It established a formidable position in the worldwide mobile voicemail management market and sold a popular short message service center (SMSC) product. While headquartered in the US, most of the company's research and development was done in Israel; Comverse became one of the more visible success stories in Israel's hi-tech industry. It was one of Israel's largest employers of software engineers, was closely followed in the nation's business press, and was the first Israeli-associated company to join the S&P 500 index.
In 2006, Comverse was involved in an options backdating scandal. Alexander and two other top executives were charged in the US with multiple counts of conspiracy, fraud, money laundering and making false filings. Alexander fled the country to Namibia where he fought extensively against extradition. The scandal proved difficult for Comverse Technology to recover from; the company was delisted from Nasdaq, removed from the S&P 500, and spent the next several years consumed by the costly need to restate its financial reports for several years. Additionally affected by the 2008 financial crisis and changes in the mobile phone market, the company underwent several rounds of large-scale layoffs and sold off parts of its business. By 2011, the company began a turnaround.
During 2012 and 2013, Comverse Technology divested itself of all its holdings and ceased to exist. The two independent companies that carried on its most well-known product lines were a newly independent Comverse, Inc. and Verint Systems. After further mergers Comverse, Inc. became Xura in 2015 and then Mavenir in 2017, while part of the Comverse business went to Amdocs in 2015.
Subsidiaries
Comverse Technology had multiple subsidiaries, many of which are still in business. Their activities at the time of their belonging to Comverse Technology were: Comverse, also known as Comverse Network Systems or Comverse CNS, was a provider of software and systems enabling value-added services for voice, messaging, mobile Internet and mobile advertising; converged billing and active customer management. Comverse's solutions supported flexible deployment models, including in-network, hosted and managed services, and could run on circuit-switched, IP, IMS, and converged network environments. Comverse's customer base spanned more than 130 countries and covered over 500 communication service providers serving more than two billion subscribers. It typically provided some 70 percent of Comverse Technology's overall revenue. Comverse had 100 local offices in 40 countries, with its corporate headquarters located in Wakefield, Massachusetts, in the United States. Verint Systems (which, from 1999 to 2002, was known as Comverse Infosys) was a provider of solutions for analysis of intercepted communications, digital video-focused security and surveillance, and analytics and business intelligence for the enterprise.Longueuil, Wireless Messaging Demystified, p. 248. Their products were aimed at enabling government and enterprises to make sense of the vast information they collected to meet performance and security goals. Verint solutions were used by more than 10,000 organizations in 150 countries. Verint was headquartered in Melville, New York, with offices worldwide and 2500 employees around the globe. By 2011, Verint was 52 percent owned by Comverse Technology. Ulticom provided signaling solutions for wireless, wireline, and Internet communications. Ulticom's products were used by telecommunication equipment and service providers worldwide to deploy mobility, location, payment, switching, and messaging services. Ulticom was headquartered in Mount Laurel, New Jersey, with additional offices in the United States, Europe, and Asia. Comverse acquired Ulticom in 1996 and sold it in 2010. Startel sold integrated voice, data and networking solutions for use in call centers worldwide. It was originally an independent company that was acquired by Comverse Technology in 1992. Startel was sold to financier Bill Robertshaw in the late 2000s and then became employee-owned in 2011. Starhome provided roaming services for mobile network operators. The Starhome portfolio included international roaming services and core network solutions across various technologies, including intelligent networks and next-generation networks. It was fully owned by Comverse Technology until being sold to Fortissimo Capital in 2012 for $54 million. ComSor was a venture capital operation, created as a subsidiary in partnership with Soros Fund Management, that invested in start-up companies directly and was active in the late 1990s and early 2000s. Headline captured in
History
Origins The company's origins date to 1982 (or 1983, sources differ), when three Israelis, aspiring investment banker Jacob "Kobi" Alexander of Shearson Loeb Rhoades, engineer Boaz Misholi, and Alexander brother-in-law and Columbia University computer science professor Yechiam Yemini, got together and founded an Israeli start-up company, Efrat Future Technologies Ltd.Breznitz, Innovation and the State, p. 220. In a meeting in New York, Misholi had the idea of building a business around centralized hardware systems to support voice and fax messaging and selling them to telecommunications companies and other large enterprises, who could then resell the voice and fax services to their customers. The three quickly returned to Israel and started the company, with the goal of securing Israeli government grants to fund the research and development work.
The early years of the company were difficult; in 1984, they founded Comverse in the United States, which became the parent company of Efrat. The name "Comverse" was chosen as a fusion of the words "communication" and "versatility".
In 1986 Comverse went public on the Nasdaq Stock Market with a $20 million valuation; the company used the money so gained as its final round of funding. The three founders had trouble working with each other, and Yemini divorced Alexander's sister; in 1987, Alexander was left with sole control of the company after the other two pulled out. The company was a penny stock on the edge of collapse.
Early successes
Under his lead, Alexander was credited with turning around Comverse's fortunes. In 1989, the Ascom Group made a $6 million direct investment in the company. In 1990, Comverse won a potentially $10 million contract, its largest yet, to deliver computers running voicemail and fax applications on West German cellular networks, beating out far larger corporations in the process. Deutsche Telekom became one of the company's biggest early customers. By 1991, the company had annual sales of $17 million and was selling a combined voice and fax mailbox system. Many of its early successes came from avoiding the huge telecommunications companies in the U.S. and instead focusing on selling to small- and medium-sized companies in the wireless market in Europe. The company also sought a variety of other markets, including developing countries such as Mexico and China for its Trilogue virtual telephone service. Gradually its product emphasis shifted more from hardware to software.
While headquartered in the U.S., nearly all its manufacturing was done in Israel, where it was able to substantially benefit from government subsidies and tax credits provided to research and development for hi-tech firms and industries by the Office of the Chief Scientist in the Ministry of Trade and Industry and by the Israel-U.S. Binational Industrial Research and Development Foundation.Breznitz, Innovation and the State, p. 65. Many other Israeli companies were built by the same model, including another top software company, Mercury Interactive.Breznitz, Innovation and the State, pp. 65, 68. During the 1990s, Comverse received at least 69 research and development grants from the OCS program.
In 1993, the company reported a 341 percent rise in profits on revenues in the $64 million range and was named a "Company to Watch" by Fortune magazine. However its stock plunged for a while in 1994 after a disappointing earnings report.
By 1995, Comverse was best known for its AudioDisk product, which was sold to overseas clients and allowed legal authorities and intelligence agencies to record and store data collected from wiretaps. Half the company's revenues at that point were from AudioDisk, and market analysts were recommending Comverse's stock.
Growth with wireless Comverse became a market leader in voice messaging software and boomed during the late 1990s with the surge in mobile phone use. Much of its market focus was on wireless operators and overseas companies, and it gained a formidable position in the worldwide mobile voicemail management market. The growth coincided with SMS text messages becoming popular; the first big application for SMS was as a notification mechanism to tell a wireless subscriber that voicemail were stored in a voicemail box. Comverse expanded this application into a full-blown short message service center (SMSC), which receives, buffers, processes, and dispatches all SMS messages throughout a mobile network. Comverse branded and productised this as the Intelligent Short Message Service Center, or ISMSC. Typical of telecomm software, it ran on Unix-based platforms, such as UnixWare and later Linux. Comverse's ISMSC found success as a lower-price solution for lower-traffic networks, where it competed with Logica's Telepath solution. Other companies in the SMSC space included CMG and Openwave.Longueuil, Wireless Messaging Demystified, p. 113. ISMSC found considerable market penetration, exemplified by all six of Hong Kong's wireless carriers using it.
Comverse also became a participant in forming international wireless standards, such as in 2001 for the Speech Application Language Tags (SALT) markup language for XML to add voice capabilities to web-based applications.Longueuil, Wireless Messaging Demystified, pp. 297–298. Additional industry standards groups in which Comverse has been active include the Open Mobile Alliance and TM Forum.