The publication of the results of Comverse Technology Inc. (Pink Sheets: CMVT) three weeks ago and its plans to sell off subsidiaries swung the spotlight on some of its lesser known units, such as Starhome Inc.
Comverse Technology's subsidiaries included Comverse Inc., Verint Systems Inc. (Nasdaq: VRNT), Ulticom Inc. (Nasdaq: ULCM) (recently bought by private equity fund Platinum Equity), and Starhome, which is not a public company, and which has operated below the radar for years. Starhome, founded in 1999, provides roaming technologies and services for mobile telephone subscribers.
Earlier this week, Starhome unveiled its new control center, which will handle roaming for 1.5 billion tourists on various international networks, as well as providing business analysis services for carriers. The control room, located at the company's headquarters in Ra'anana, is in addition to the control room in Switzerland.
Starhome CEO Eitan Achlow says that, altogether, the company invested tens of millions of dollars in the control centers and various infrastructures, resulting in R&D costs amounting to a nearly third of revenue.
Comverse said in its report that it has been in talks in recent months with founder and former CEO Kobi Alexander to buy back his shares in the company as part of a legal settlement between Comverse and its shareholders. Comverse said that it will eventually own Starhome stake held by Alexander. Alexander is currently residing in Namibia.
Achlow says that Alexander's holding in Starhome "was no barrier to the company". However, the picture behind the scenes is more complicated. In 2007-08, Comverse was in talks to sell Starhome for $200 million, but Alexander's holding deterred the potential buyers.
Achlow reiterates, "The company is not on the shelf. Both the board and the investors are quite pleased with its conduct in the past two years, and want to see the continuation."
Starhome had $40 million in sales in 2009, the same as in 2008. 2010 sales are up. Achlow says that the company posted a net profit in 2009, and predicts that it will continue to grow. "We have our largest-ever orders backlog. We also have our largest-ever cash reserves, no debt, and an excellent liquidity ratio," he says.
Starhome has 200 employees, including 170 in Israel. Achlow says that the company has no plans for an IPO in the near future. "We're seeking to buy technologies for inorganic growth," he says, adding that the strategic ambition was "to become the world's roaming operating system."
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2010
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