Verint granted filing extension

Analytics firm boasts Multivision, Mercom acquisitions
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Tuesday, August 1, 2006

MELVILLE, N.Y.--Unable to file its first quarter results due to parent company Comverse's ongoing internal investigation into options practices, video analytic software maker Verint Systems was a month into its SEC filing deadline extension as Security Systems News went to print.
"It's an awkward situation, but it's really not a Verint issue," said Verint vice president of corporate development and investor relations Alan Roden.
"We're waiting for information from Comverse that will enable us to finalize our financials," said Roden. "We're dependent on them finishing their internal review."
This filing delay led NASDAQ, where Verint is publicly traded, to issue a letter to the company alerting it of non-compliance with NASDAQ rules and possible delisting. However, Verint on June 27 received a 90-day extension from NASDAQ for its filing deadline, the result of a May 24 petition hearing.
Verint was originally wholly owned by Comverse, becoming public through an "IPO carve out" in 2002, and Comverse still owns 58 percent of the company. Because of this affiliation, when Comverse announced this spring that it was forming a special committee to review options-granting practices, Verint was forced to take notice.
"Verint employees were granted options by Comverse," said Roden. "Comverse may have to take a charge, and Verint may have to take a charge, because the charge follows the employees." Until Verint knows what that charge is--purely an accounting charge, said Roden--the company can't with certainty file its financials.
Will 90 days be enough time?
"Unfortunately, it's an independent committee that's conducting the review," Roden said, "and we don't have great visibility into that process. We just don't have the information. But Comverse is similarly motivated with Verint to get this done and get it behind us."
Roden said many Verint investors have had similar issues with other companies lately, including others listed with NASDAQ, and thus many of them "are not overly concerned about this kind of situation." For instance, online verification company VeriSign and web traffic management provider Foundry Networks both in late June received a grand jury subpoena from the U.S. Attorney for the Northern District of California requesting documents relating to VeriSign's stock option grants and practices.
In fact, one investor web site, CIBC World Markets, listed Verint as a "sector outperformer" and reported, "We continue to see the near-term uncertainty as an opportunity to enter a [long-term] growth story on the cheap."
And what about that growth story?
Roden said, "It's pretty straight-forward. We've had 18 quarters of sequential growth. We have a very healthy balance sheet with more than $200 million in cash on hand.
As for big recent wins, Roden and marketing head Mariann McDonagh cited a multi-million dollar order with the City of Beijing for a surveillance system to help with 2008 Olympic security; multiple orders for petrochemical and refining companies in Latin America; new seaport customers in New York and Hong Kong; a new mass-transit system for one of the largest cities in Germany, delivering video alerts over a GSM network; and Wells Fargo's use of Verint for surveillance at over 4000 locations.
Further, Verint acquired Multivision, a Hong Kong-based surveillance software company, for $52 million at the beginning of this year, and Roden, who's involved with much of Verint's M&A strategy, said, "acquisitions will continue to be a part of our growth strategy, expanding our geographic presence ... or buying technologies to expand our portfolio."
To that end, Verint bought Mercom Systems, a provider of recording and workforce evaluation solutions, for $35 million, as SSN went to press, July 14.