With record annual revenue of $3.16 billion and a fiscal fourth quarter that generated 14 percent more revenue that last year’s, Amdocs CEO Dov Baharav nonetheless said he was humbled by what has happened to the financial world. As a result, the company is preparing for a flat 2009.
Amdocs Management LTD’s fourth quarter revenue increased to $825.3 million and its non-GAAP operating income of $148 million was an increase of 16 percent over last year’s fourth quarter. The company’s cash flow for this latest quarter was $145 million.
Baharav called it a good year, but acknowledged it could have been better. He said the markets’ extreme volatility had an adverse effect on revenue. That trend will continue, he said, driven by foreign currency headwinds and uncertainty that will impact the spending decisions of Amdocs’ customers.
However, Baharav said, Amdocs is well positioned to cope with the market it expects to see in 2009, citing the company’s balance sheet, cash flow and healthy customer base.
During the fourth quarter, Amdocs brought in new business from Comcast, which will deploy customer care, billing and OSS products based on Amdocs’ latest CES 7.5 product. Another customer in the cable and satellite market chose Amdocs Enterprise Product Catalog. The company signed a six-year managed services agreement to support MetroPCS, a provider of advanced wireless services. In Europe, Amdocs was chosen by Debitel, the largest provider of mobile services in Germany, to provide a single billing platform to support its consolidated operations. And Vodafone selected Amdocs OSS fulfillment products for deployments in key European locations. Also, International Telecommunications Company in Ukraine selected Amdocs Compact Convergence offering for real-time charging and service delivery across its CDMA network.
Amdocs provided guidance for the first quarter of next year between $785 million and $810 million. Beyond that, all bets are off.
“While we cannot commit to guidance for the full year, we are managing our expenses under the assumption that fiscal 2009 revenues could be flat to single digit growth for the year,” Baharav said.
Amdocs is doing this to maintain the profit levels it saw in the fourth quarter. In the current year, it eliminated 700 employees.
Baharav said that the pace of transformation and other projects is likely to slow. However, the view into next year is not all negative.
“We see encouraging signs in the market. There has been no cancellation of current activity ... and our OSS platform is driving growth as evidenced by our Vodafone deal in the fulfillment area,” he said, and added that the cable and satellite markets where it is doing an increasing amount of business won’t be affected as much by the markets.
Overall, Baharav said, “The world is facing unbelievable financial turmoil and we see signs of a global recession.”
Another bright spot for Amdocs as it heads into its fiscal 2009 was the $60 million acquisition this week of ChangingWorlds Ltd.. ChangingWorlds is a privately-held provider of personalization and intelligent portal solutions for mobile service providers.
“Personalization is crucial to service providers’ success as they seek to strengthen their role in the value chain,” Baharav said. “Using ChangingWorld’s personalization products and technology in combination with our strong and broad portfolio will allow service providers to power a more relevant and personal experience across all touch points.”
The acquisition is expected to close during Amdocs' fiscal quarter ending Dec. 31, 2008. ChangingWorlds and Amdocs share several customers including Sprint, the Vodafone Group and Telefonica O2.
