Comverse Technology

Comverse Technology was a United States-based technology company whose principal operations and research heritage were closely associated with Israel’s software industry. Headquartered in Woodbury, New York, the company developed telecommunications software and systems, concentrating on value-added services for communications service providers, especially mobile network operators. Its portfolio eventually covered voice-mail platforms, messaging infrastructure, converged billing, customer-management tools, mobile Internet and advertising services, roaming solutions, and systems used by authorized agencies to record and analyze intercepted communications. The company’s origins date to 1982, when Jacob “Kobi” Alexander, engineer Boaz Misholi, and computer-science professor Yechiam Yemini established an Israeli venture initially known as Efrat Future Technologies. The founders sought to build centralized hardware and software platforms that telecommunications companies could use to offer voice- and fax-messaging services. Comverse was established in the United States in 1984 as the parent company of the Israeli operation, and its name combined the ideas of communication and versatility. The business obtained important support from Israeli research-and-development grants and tax incentives, while maintaining a United States corporate base. Comverse became a public company in 1986. Its early years were difficult, but under Alexander’s leadership it won important contracts in European wireless markets and gradually shifted from specialized hardware toward software. A major 1990 contract to provide voicemail and fax systems for cellular networks in West Germany helped establish its credibility. During the 1990s, the company expanded its international customer base and developed products for voicemail, virtual telephony, lawful-interception recording, and messaging. Its AudioDisk system became a significant product for authorized wiretap recording and storage, while its voice-mail platforms benefited from the worldwide expansion of mobile telephony. The growth of SMS created another major opportunity. Comverse developed the Intelligent Short Message Service Center, or ISMSC, a platform that received, buffered, processed, and delivered text messages across mobile networks. The product gained adoption among operators seeking a cost-effective solution for lower-volume networks. Comverse also participated in industry standardization efforts, including work related to voice-enabled web applications and mobile-industry organizations. The company expanded through acquisitions and corporate restructuring. Its 1997 purchase of Boston Technology for approximately $843 million in stock strengthened Comverse’s position in the United States and made it a major supplier to large international carriers. In 1999, Comverse Technology organized important activities into Comverse Network Systems and Comverse Infosys, the latter later becoming associated with Verint Systems. Other businesses included Ulticom, which supplied signaling software, Starhome, which delivered mobile-roaming services, and Startel, a provider of contact-center systems. At the turn of the century Comverse was one of Israel’s most prominent technology success stories. Revenue reached approximately $1.2 billion in 2000, and the company became the first Israel-associated company added to the S&P 500. Its stock was widely followed in Israel, and its engineering workforce made it one of the country’s significant software employers. The telecommunications downturn and broader technology recession after 2000 weakened demand, leading to warnings, a major share-price decline, and thousands of job reductions. The company’s recovery was then overwhelmed by an options-backdating scandal disclosed in 2006. Alexander and two other senior executives faced United States criminal charges involving alleged backdating, financial misstatements, false filings, conspiracy, and money laundering. A…

Comverse Technology developed from an Israeli telecommunications-technology venture founded in 1982 by Jacob “Kobi” Alexander, Boaz Misholi, and Yechiam Yemini. The original business, Efrat Future Technologies, pursued centralized systems that enabled telephone companies and other large enterprises to offer voice and fax messaging. Comverse was incorporated in the United States in 1984 as the parent company of the Israeli operation. The company relied substantially on Israeli public research support and tax incentives during its formative years, while its United States corporate structure helped it access international capital markets. Comverse listed on Nasdaq in 1986. The founders’ relationship subsequently broke down, leaving Alexander in control. The company was close to failure during part of the late 1980s, but a strategic investment from Ascom and a series of new telecommunications contracts gave it room to recover. A particularly important 1990 contract supplied voicemail and fax systems to cellular networks in West Germany. By the early 1990s Comverse was reporting meaningful sales and had learned to compete by targeting European wireless operators and other customers that were not always the primary focus of the largest United States telecommunications suppliers. The company gradually moved from hardware-centered systems to software platforms. During the mid-1990s, AudioDisk became an important product. It allowed authorized government and law-enforcement customers to record and store data obtained through intercepted communications. This business gave Comverse a presence beyond conventional carrier messaging, although it also placed the company in a sensitive regulatory and public-policy area. The expansion of mobile-phone use in the second half of the 1990s transformed Comverse’s scale. Voice-mail platforms became a core growth engine, and Comverse established a strong position in mobile voicemail management. The spread of SMS created a second major platform opportunity. Its Intelligent Short Message Service Center processed and routed messages across carrier networks, initially finding particular traction in lower-traffic systems that needed a comparatively economical SMS infrastructure. The company also expanded into converged billing, active customer management, mobile Internet, advertising, and other value-added services. It participated in mobile and telecommunications standards work, including the Speech Application Language Tags initiative and industry bodies such as the Open Mobile Alliance and TM Forum. Acquisitions accelerated this development. Comverse acquired Startel in 1992 and purchased the telecommunications-signaling business later known as Ulticom in 1996. The 1997 acquisition of Boston Technology, valued at about $843 million in stock, substantially increased Comverse’s position in the United States and made it a supplier to many of the world’s largest carriers. In 1999, the company reorganized major activities into Comverse Network Systems and Comverse Infosys. Comverse Infosys later became associated with Verint Systems, whose products focused on communications interception, surveillance, analytics, and business intelligence. Other subsidiaries and investments broadened the group’s reach into roaming, contact centers, and emerging technology companies. Comverse’s rapid expansion made it a flagship of Israel’s technology sector. Its revenue reached about $1.2 billion in 2000, and the company became the first Israel-associated constituent of the S&P 500. It was also added to the Nasdaq-100. The technology downturn beginning in 2000 exposed the company to weaker carrier spending and falling technology valuations. Comverse issued warnings, its stock price fell sharply, and more than 3,000 positions were eliminated during the difficult period. Demand later recovered with renewed wireless growth, but the business remained exposed to carrier consolidation, changing network architectures, and the shift from traditional circuit-switched systems toward IP and converged environments. In 2006, a stock-options-backdating scandal became the defining crisis in Comverse Technology’s history. United States authorities charged Alexander and two other senior executives with offenses including conspiracy, fraud, money laundering, and false corporate filings. Alexander left the United States for Namibia and fought extradition. The company faced extensive financial-reporting work, restated several years of results, lost its Nasdaq listing, and was removed from the S&P 500. The legal and accounting burden weakened the group at the same time that the 2008 financial crisis and changes in the mobile market were pressuring telecommunications suppliers. Additional layoffs and asset sales followed. A restructuring and turnaround effort during the early 2010s increasingly separated the group’s businesses. Ulticom was sold in 2010, Starhome was sold to Fortissimo Capital in 2012, and other assets were divested. By 2012 and 2013 Comverse Technology had disposed of its holdings and ceased to operate as a holding company. The communications-software operations continued as an independent Comverse business, later becoming Xura and then part of Mavenir. Parts of the former Comverse business also went to Amdocs, while the monitoring and analytics lineage continued through Verint. Comverse Technology therefore survives primarily as a historical corporate brand and as a predecessor to several telecommunications and enterprise-software businesses.

1. 2013End of Comverse Technology

   The holding company completed its divestitures and ceased to exist as an independent group.

   Source
2. 2012Starhome divestiture

   Starhome was sold to Fortissimo Capital for $54 million.

   Source
3. 2010Ulticom divestiture

   Comverse Technology sold its telecommunications-signaling subsidiary.

   Source
4. 2006Options-backdating crisis

   Criminal charges against senior executives triggered financial restatements, delisting, and a prolonged corporate crisis.

   Source
5. 2000Revenue surpasses one billion dollars

   The company reported revenue of approximately $1.2 billion amid rapid wireless-sector expansion.

   Source
6. 1999Creation of major operating subsidiaries

   Comverse organized key telecommunications and monitoring activities under Comverse Network Systems and Comverse Infosys.

   Source
7. 1999S&P 500 inclusion

   Comverse became the first Israel-associated company to enter the S&P 500.

   Source
8. 1997Boston Technology acquisition

   The acquisition expanded Comverse’s voice-messaging business and United States carrier presence.

   Source
9. 1996Acquisition of the business later known as Ulticom

   Comverse acquired a signaling-technology business that it later renamed Ulticom.

   Source
10. 1990Breakthrough cellular-network contract

    Comverse won a major contract to supply voicemail and fax systems for West German cellular networks.

    Source
11. 1986Nasdaq listing

    Comverse became publicly traded on Nasdaq.

    Source
12. 1984Comverse is established in the United States

    The United States Comverse entity was formed as the parent company of the Israeli operation.

    Source
13. 1982Founding of the original venture

    Alexander, Misholi, and Yemini established the Israeli venture that became the foundation of Comverse Technology.

    Source

Telecommunications business-support, operations-support, messaging, and value-added-services software provider

• Comverse voice messagingTelecommunications value-added services

  Carrier-grade voice-mail and messaging platforms that allowed mobile and fixed-line operators to provide subscriber mailboxes, notifications, message retrieval, and related communication services. Voice messaging became the company’s most important commercial area during the expansion of mobile telephony in the late 1990s and helped establish Comverse as a major supplier to international network operators.

• Intelligent Short Message Service Center (ISMSC)Mobile messaging infrastructure

  A short message service center designed to receive, buffer, process, and distribute SMS traffic throughout a mobile network. It expanded beyond the earlier use of SMS as a voicemail notification channel and was positioned as a cost-effective option for operators with lower message volumes. The product ran on Unix-based platforms and later Linux environments.

• AudioDiskLawful-interception recording

  A system for authorized authorities and intelligence organizations to record and store information collected through communications interception. AudioDisk was a major source of Comverse revenue during the mid-1990s and formed part of the business lineage later associated with Verint’s monitoring and analytics operations.

• Comverse billing and customer-management platformsTelecommunications BSS/OSS

  Software for converged billing, active customer management, and related carrier business-support functions. These offerings were designed for communications providers operating across circuit-switched, IP, IMS, and converged network environments, with deployment options including in-network, hosted, and managed-service models.

• Starhome roaming servicesMobile roaming

  A portfolio of international-roaming services and core-network solutions for mobile operators. Starhome supported roaming across multiple network generations and technology environments before being sold by Comverse Technology to Fortissimo Capital in 2012.

• Ulticom signaling solutionsTelecommunications signaling

  Software and systems supporting signaling requirements in wireless, wireline, and Internet communications. The products were used in mobility, location, payment, switching, and messaging applications. Comverse acquired the business in 1996 and sold it in 2010.

• 2013Complete breakup of the holding companyStrategy

  Comverse Technology had divested its principal holdings and no longer operated as an integrated corporate group.

  What changed. The company completed its disposals and ceased to exist, leaving successor businesses to carry forward its major product lines.

  Aftermath. Comverse’s communications operations later became Xura and then part of Mavenir; other activities moved to companies including Amdocs, while the monitoring lineage continued through Verint.

  Source
• 2012Sell StarhomeM&A

  The company continued dismantling its portfolio after years of financial and market pressure.

  What changed. Starhome was sold to Fortissimo Capital for $54 million.

  Aftermath. The sale removed another major subsidiary and contributed to the eventual end of Comverse Technology as a holding company.

  Sale proceeds. $54 million (2012)

  Source
• 2010Sell UlticomM&A

  Comverse Technology was narrowing its portfolio and raising focus and liquidity through asset divestitures.

  What changed. It sold the Ulticom signaling business.

  Aftermath. Ulticom continued outside the Comverse Technology group, while the parent company proceeded with further divestitures.

  Source
• 2006Financial-restatement and restructuring responseStrategy

  The options-backdating investigation and resulting reporting problems placed the company under legal, regulatory, and financial pressure.

  What changed. Comverse Technology undertook extensive financial restatements and reorganized its operations while reducing costs and later selling noncore assets.

  Aftermath. The company lost its Nasdaq listing and S&P 500 membership, suffered reputational damage, and entered a prolonged restructuring period.

  Source
• 1999Separate telecommunications and monitoring businessesStrategy

  The company had developed distinct product families for carrier services and communications monitoring.

  What changed. Comverse Technology formed Comverse Network Systems and Comverse Infosys as major operating subsidiaries.

  Aftermath. The telecommunications business and the monitoring, recording, and analytics business developed along increasingly separate corporate paths; Comverse Infosys later became associated with Verint Systems.

  Source
• 1997Acquire Boston TechnologyM&A

  Comverse sought a stronger position in the large United States telecommunications market and a broader base of carrier customers.

  What changed. It acquired Boston Technology in a stock transaction valued at approximately $843 million.

  Aftermath. The deal expanded Comverse’s voice-messaging footprint and made it a supplier to many of the world’s leading carriers.

  Transaction value. Approximately $843 million (1997)

  Source

• 2006Stock-options backdating scandalControversy

  Comverse Technology became embroiled in a United States investigation into the alleged backdating of employee stock options and related financial-reporting practices. Co-founder and chief executive Jacob Alexander and two other senior executives were charged with conspiracy, fraud, money laundering, and false filings. Alexander left the United States for Namibia and contested extradition. The company had to restate financial reports, was delisted from Nasdaq, removed from the S&P 500, and spent years dealing with the resulting legal, accounting, and reputational damage.

  Source

• 2013Comverse Technology ceases to exist as a holding company

  After divesting its remaining interests, the parent company ended as an independent corporate group and its operating businesses continued under successor companies.

  M&AOther
  Source
• 2012Starhome is sold to Fortissimo Capital

  The mobile-roaming business was sold for $54 million, contributing to the breakup of the former Comverse Technology group.

  M&A
  Source
• 2010Ulticom is sold

  Comverse Technology divested its signaling-software subsidiary as part of a broader asset-sale and restructuring program.

  M&A
  Source
• 1999Comverse joins the S&P 500

  Comverse Technology became the first Israel-associated company included in the S&P 500 index.

  Other
  Source
• 1997Comverse acquires Boston Technology

  The stock-funded acquisition expanded Comverse’s access to the United States telecommunications market and strengthened its voice-messaging business.

  M&A
  Source
• 1990Comverse wins major West German cellular-network contract

  A large voicemail and fax-system contract for West German cellular networks became an important early commercial breakthrough.

  Product launch
  Source
• 1986Comverse Technology goes public on Nasdaq

  The company completed its public offering on the Nasdaq Stock Market, providing capital for expansion after its early development period.

  Other
  Source

1. Comverse Technology