Comverse Technology, Inc., often referred to as simply Comverse, was a

technology Technology is the application of knowledge to reach practical goals in a specifiable and reproducible way. The word ''technology'' may also mean the product of such an endeavor. The use of technology is widely prevalent in medicine, scien ...

company located in Woodbury, New York in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

, 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". Founded in 1982, the company went public on the

Nasdaq Stock Market The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...

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 A voicemail system (also known as voice message or voice bank) is a computer-based system that allows users and subscribers to exchange personal voice messages; to select and deliver voice information; and to process transactions relating to ind ...

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 engineer Software engineering is a systematic engineering approach to software development. A software engineer is a person who applies the principles of software engineering to design, develop, maintain, test, and evaluate computer software. The term ''p ...

s, was closely followed in the nation's business press, and was the first Israeli-associated company to join the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of ...

index. In 2006, Comverse was involved in an

options backdating In finance, options backdating is the practice of altering the date a stock option was granted, to a usually earlier (but sometimes later) date at which the underlying stock price was lower. This is a way of repricing options to make them more v ...

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 Namibia (, ), officially the Republic of Namibia, is a country in Southern Africa. Its western border is the Atlantic Ocean. It shares land borders with Zambia and Angola to the north, Botswana to the east and South Africa to the south and ea ...

where he engaged in a prolonged fight 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 financial crisis of 2008 and on 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 Verint Systems is a Melville, New York-based analytics company which was founded in 2002. The company sells software and hardware products for customer engagement management and business intelligence. Their products are designed to assist clie ...

. After further mergers Comverse, Inc. became

Xura Xura, Inc. (NASDAQ: MESG), previously known as Comverse, Inc., was a technology company headquartered in Wakefield, Massachusetts, United States, in existence from 2013 to 2017, that offered a portfolio of digital services which enabled global co ...

in 2015 and then

Mavenir HRMavenir Systems, Inc. dba Mavenir is an American telecommunications software company, created in 2017 as a result of a three-way merger of existing companies and technologies, that develops and supplies cloud-native software to the communicat ...

in 2017, while part of the Comverse business went to Amdocs in 2015.

Subsidiaries

Comverse Technology building in Tel Aviv

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 The mobile web refers to mobile browser-based World Wide Web services accessed from handheld mobile devices, such as smartphones or feature phones, through a mobile or other wireless network. History and development Traditionally, the Worl ...

and

mobile advertising Mobile advertising is a form of advertising via mobile (wireless) phones or other mobile devices. It is a subset of mobile marketing, mobile advertising can take place as text ads via SMS, or banner advertisements that appear embedded in a mo ...

; converged billing and active

customer management Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using data analysis to study large amounts of information. CRM systems compile data from a ra ...

; and IP communications. Comverse's solutions supported flexible deployment models, including in-network, hosted and managed services, and could run on

circuit-switched Circuit switching is a method of implementing a telecommunications network in which two network nodes establish a dedicated communications channel ( circuit) through the network before the nodes may communicate. The circuit guarantees the full ...

, IP,

IMS Ims is a Norwegian surname. Notable people with the surname include: * Gry Tofte Ims (born 1986), Norwegian footballer * Rolf Anker Ims (born 1958), Norwegian ecologist See also * IMS (disambiguation) Ims is a Norwegian surname. Notable people wit ...

, 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 Wakefield is a town in Middlesex County, Massachusetts in the Greater Boston metropolitan area, incorporated in 1812 and located about north-northwest of Downtown Boston. Wakefield's population was 27,090 at the 2020 census. Wakefield offer ...

, in the United States. *

(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 Analytics is the systematic computational analysis of data or statistics. It is used for the discovery, interpretation, and communication of meaningful patterns in data. It also entails applying data patterns toward effective decision-making. It ...

and

business intelligence Business intelligence (BI) comprises the strategies and technologies used by enterprises for the data analysis and management of business information. Common functions of business intelligence technologies include reporting, online analytical ...

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 Mount Laurel is a township in Burlington County in the U.S. state of New Jersey. It is a suburb of Philadelphia and part of the South Jersey region. As of the 2010 U.S. census, the township's population was 41,864, reflecting an increase of 1 ...

, 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 network The Intelligent Network (IN) is the standard network architecture specified in the ITU-T Q.1200 series recommendations. It is intended for fixed as well as mobile telecom networks. It allows operators to differentiate themselves by providing v ...

s and

next-generation network The next-generation network (NGN) is a body of key architectural changes in telecommunication core and access networks. The general idea behind the NGN is that one network transports all information and services (voice, data, and all sorts of med ...

s. It was fully owned by Comverse Technology until being sold to Fortissimo Capital in 2012 for $54 million. * ComSor was a

venture capital Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which h ...

operation, created as a subsidiary in partnership with

Soros Fund Management Soros Fund Management, LLC is a private American investment management firm. It is currently structured as a family office, but formerly as a hedge fund. The firm was founded in 1970 by George Soros and, in 2010, was reported to be one of the mos ...

, that invested in start-up companies directly and was active in the late 1990s and early 2000s.

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 Shearson was the name of a series of investment banking and retail brokerage firms from 1902 until 1994, named for Edward ShearsonBoaz Misholi, and Alexander brother-in-law and

Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...

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

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 Penny stocks are common shares of small public companies that trade for less than one dollar per share. The U.S. Securities and Exchange Commission (SEC) uses the term "Penny stock" to refer to a security, a financial instrument which represents a ...

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 Deutsche Telekom AG (; short form often just Telekom, DTAG or DT; stylised as ·T·) is a German telecommunications company that is headquartered in Bonn and is the largest telecommunications provider in Europe by revenue. Deutsche Telekom was ...

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 A Ministry of Trade and Industry, Ministry of Commerce, Ministry of Commerce and Industry or variations is a ministry that is concerned with a nation's trade, industry and commerce. Notable examples are: List *Algeria: Ministry of Industry and ...

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 Mercury Interactive Corporation was an Israeli company acquired by the HP Software Division. Mercury offered software for application management, application delivery, change and configuration management, service-oriented architecture, change r ...

. 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 Fortune may refer to: General * Fortuna or Fortune, the Roman goddess of luck * Luck * Wealth * Fortune, a prediction made in fortune-telling * Fortune, in a fortune cookie Arts and entertainment Film and television * ''The Fortune'' (1931 film) ...

'' 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 A voicemail system (also known as voice message or voice bank) is a computer-based system that allows users and subscribers to exchange personal voice messages; to select and deliver voice information; and to process transactions relating to ind ...

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 Short Message/Messaging Service, commonly abbreviated as SMS, is a text messaging service component of most telephone, Internet and mobile device systems. It uses standardized communication protocols that let mobile devices exchange short text ...

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 Unix (; trademarked as UNIX) is a family of multitasking, multiuser computer operating systems that derive from the original AT&T Unix, whose development started in 1969 at the Bell Labs research center by Ken Thompson, Dennis Ritchie, ...

-based platforms, such as UnixWare and later

Linux Linux ( or ) is a family of open-source Unix-like operating systems based on the Linux kernel, an operating system kernel first released on September 17, 1991, by Linus Torvalds. Linux is typically packaged as a Linux distribution, whi ...

. Comverse's ISMSC found success as a lower-price solution for lower-traffic networks, where it competed with

Logica Logica plc was a multinational IT and management consultancy company headquartered in London and later Reading, United Kingdom. Founded in 1969, the company had offices in London and in a number of major cities across England, Wales and Sc ...

's Telepath solution. Other companies in the SMSC space included CMG and

Openwave Openwave (formerly software.com, phone.com, and Libris, Inc) is a division of Enea. It provides video traffic management and 5G mobile products. Two of Openwave's former products launched as private companies; Openwave Mobility and Openwave ...

.Longueuil, ''Wireless Messaging Demystified'', p. 113. ISMSC found considerable market penetration, exemplified by all six of

Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China (abbr. Hong Kong SAR or HKSAR), is a List of cities in China, city and Special administrative regions of China, special ...

'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 Extensible Markup Language (XML) is a markup language and file format for storing, transmitting, and reconstructing arbitrary data. It defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. T ...

to add voice capabilities to web-based applications. Additional industry standards groups in which Comverse has been active include the

Open Mobile Alliance OMA SpecWorks, previously the Open Mobile Alliance (OMA) is a standards organization which develops open, international technical standards for the mobile phone industry. It is a nonprofit Non-governmental organization (NGO), not a formal gov ...

and

TM Forum TM Forum is a global industry association for service providers and their suppliers in the telecommunications industry. Members include communications and digital service providers, telephone companies, cable operators, network operators, clo ...

In addition to growing organically, Comverse Technology began acquiring other companies in both Israel and the U.S. It acquired Dale, Gesek, McWilliams, & Sheridan, later known as DGM&S Telecom, in 1996 and renamed it Ulticom in 1999. Comverse Technology acquired one of its key rivals, Boston Technology, for $843 million in stock in 1997. The acquisition gave Comverse entree into the large U.S. telecommunications market and meant Comverse would be supplying voice messaging systems to 12 of the world's top 20 carriers, and left it the third-largest supplier after

Lucent Lucent Technologies, Inc. was an American multinational telecommunications equipment company headquartered in Murray Hill, New Jersey. It was established on September 30, 1996, through the divestiture of the former AT&T Technologies business u ...

and Northern Telecom. In 1999, as it saw record earnings, Comverse formed two wholly owned subsidiaries, Comverse Network Systems and Comverse Infosys, representing the telecommunications services platforms and products and the digital monitoring and recording products, respectively. By 2000, its revenues were $1.2 billion and it had global operations. It continued to aggressively acquire small companies to fill out its technologies, as exemplified by the purchase of Loronix, Gaya Software, and Exalink, all within a 30-day period in 2000. The company's stock price rose from around $10 in late 1998 to over $120 in early 2001. The company was able to raise money several times on Nasdaq, including once for its Ulticom subsidiary and once (at a valuation of $600 million) shortly before the

Dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Comp ...

burst. Comverse was one of the most prominent success stories in Israel's hi-tech industry, with both ''

Haaretz ''Haaretz'' ( , originally ''Ḥadshot Haaretz'' – , ) is an Israeli newspaper. It was founded in 1918, making it the longest running newspaper currently in print in Israel, and is now published in both Hebrew and English in the Berliner ...

'' and ''

The Jerusalem Post ''The Jerusalem Post'' is a broadsheet newspaper based in Jerusalem, founded in 1932 during the British Mandate of Palestine by Gershon Agron as ''The Palestine Post''. In 1950, it changed its name to ''The Jerusalem Post''. In 2004, the pap ...

'' referring to it as a

flagship A flagship is a vessel used by the commanding officer of a group of naval ships, characteristically a flag officer entitled by custom to fly a distinguishing flag. Used more loosely, it is the lead ship in a fleet of vessels, typically the ...

of that industry. As CEO, Alexander was sought out for meetings in

Tel Aviv Tel Aviv-Yafo ( he, תֵּל־אָבִיב-יָפוֹ, translit=Tēl-ʾĀvīv-Yāfō ; ar, تَلّ أَبِيب – يَافَا, translit=Tall ʾAbīb-Yāfā, links=no), often referred to as just Tel Aviv, is the most populous city in the G ...

by world leaders such as Chinese President

Jiang Zemin Jiang Zemin (17 August 1926 – 30 November 2022) was a Chinese politician who served as general secretary of the Chinese Communist Party (CCP) from 1989 to 2002, as chairman of the Central Military Commission from 1989 to 2004, and as p ...

. He became known, as

Bloomberg News Bloomberg News (originally Bloomberg Business News) is an international news agency headquartered in New York City and a division of Bloomberg L.P. Content produced by Bloomberg News is disseminated through Bloomberg Terminals, Bloomberg T ...

later stated, as "the wizard of Israel's technology boom"; his oft-stated goal was for Comverse to do for Israel what

Nokia Nokia Corporation (natively Nokia Oyj, referred to as Nokia) is a Finnish multinational telecommunications, information technology, and consumer electronics corporation, established in 1865. Nokia's main headquarters are in Espoo, Finland, i ...

had done for

Finland Finland ( fi, Suomi ; sv, Finland ), officially the Republic of Finland (; ), is a Nordic country in Northern Europe. It shares land borders with Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of Bot ...

. Comverse was one of the largest employers of

s in Israel and its stock was widely held among the Israeli investing public; as a consequence, the successes and failures of Comverse were always followed closely in the country's financial press. ( Amdocs and

were two other prominent Israeli companies in the enterprise software sector that were also closely followed.Commander, ''The Software Industry in Emerging Markets'', p. 143.) The company was also quintessentially Israeli in how it was run, with Comverse CEO Ze'ev Bregman in particular favoring a loose, relaxed system in which he knew all the employees and lines of management reporting were frequently bypassed. When Comverse Technology joined the

index in 1999, it was the first Israeli-associated company ever to do so. It set the same mark when it joined the

NASDAQ-100 The Nasdaq-100 (^NDX) is a stock market index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index. The stocks' weights in the in ...

index.Commander, ''The Software Industry in Emerging Markets'', p. 144. The

early 2000s recession The early 2000s recession was a decline in economic activity which mainly occurred in developed countries. The recession affected the European Union during 2000 and 2001 and the United States from March to November 2001. The UK, Canada and Au ...

led to some struggles for Comverse Technology, with the global economic downturn leading to publicly announced profit warnings and a plunge in the stock price in July 2001. Over 3,000 jobs were cut during the period as part of several restructuring efforts. The company still made some acquisitions, such as buying the

instant messaging Instant messaging (IM) technology is a type of online chat allowing real-time text transmission over the Internet or another computer network. Messages are typically transmitted between two or more parties, when each user inputs text and tri ...

specialist

Odigo Odigo Messenger was an early social networking service based on instant messaging. Odigo believed in connecting and forming friendships: members would "meet" if two or more visited the same web site simultaneously. Odigo Messenger allowed member ...

for $20 million in 2002, after having previously purchased a 12 percent stake in it in 2001. The image of Comverse Technology as Israel's blue-chip hi-tech stock suffered, and led to a slide in several other large Israeli technology firms. Comverse's management was criticized by analysts for having issued over-optimistic forecasts, although many other Israeli firms in the industry did even worse or failed completely during this period. In addition, the European market for mobile voicemail management was already saturated by 2002 and the prepaid wireless market was in decline. In 2002, Comverse Infosys changed its name to Verint, partly to separate its more thriving business from Comverse's struggles, and staged a modestly successful IPO of a minority portion of its stock. By 2002, Comverse Technology had more than 5,000 employees across nearly 40 countries; due to the partial spinoffs and economic difficulties, revenues were down to $735 million. In December 2001,

Fox News The Fox News Channel, abbreviated FNC, commonly known as Fox News, and stylized in all caps, is an American multinational conservative cable news television channel based in New York City. It is owned by Fox News Media, which itself is o ...

reported that wiretapping equipment provided by Comverse Infosys to the U.S. government for electronic eavesdropping may have been vulnerable, as these systems allegedly had a back door through which the wiretaps could be intercepted by unauthorized parties. Fox News reporter

Carl Cameron Carl Cameron (born September 22, 1961 as Karl Emil Othmar Lamberg-Karlovsky
, Alumni, New Hampshire Association of Broadcasters

said there was no reason to believe the Israeli government was implicated, but that "a classified top-secret investigation is underway". A March 2002 story by ''Le Monde'' recapped the Fox report and concluded: "Comverse is suspected of having introduced into its systems of the 'catch gates' in order to 'intercept, record and store' these wire-taps. This hardware would render the 'listener' himself 'listened to'." Fox News did not pursue the allegations, and in the years since, there have been no legal or commercial actions of any type taken against Comverse by the FBI or any other branch of the US Government related to data access and security issues. While no real evidence has been presented against Comverse or Verint, the allegations have become a favorite topic of

conspiracy theorists A conspiracy theory is an explanation for an event or situation that invokes a conspiracy by sinister and powerful groups, often political in motivation, when other explanations are more probable.Additional sources: * * * * The term has a nega ...

. By 2005, the company had $959 million in sales and employed over 5,000 people, of whom about half were located in Israel. That country held most of the research and development workers, many of whom occupied the company's seven buildings on HaBarzel in the Ramat HaHayal district of

, while business and marketing operations were stationed in the company's Woodbury, New York headquarters.

Options backdating scandal

Comverse Technology building in Tel Aviv side view

In 2006, Comverse Technology was involved in an

scandal. In May of that year, company founder and CEO Jacob Alexander stepped down from his position. Alexander, finance chief David Kreinberg, and former senior general counsel William Sorin (both of whom had also stepped down) were charged in July 2006 in the

United States District Court for the Eastern District of New York The United States District Court for the Eastern District of New York (in case citations, E.D.N.Y.) is the federal district court whose territorial jurisdiction spans five counties in New York State: the four Long Island counties of Nassau, ...

with multiple counts of conspiracy, fraud, money laundering and making false filings to the

Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

(SEC), all related to alleged options backdating or other actions related to stock options between 1998 and 2006. The accusations against the three included the backdating of options to when Comverse stock had been trading at low prices, the use of fake names of option holders, and the creation of secret funds in which to hold the illicit gains. The SEC also filed civil charges against the three, for filing false annual and quarterly financial reports and proxy statements from 1991 to 2005. By then, Alexander had fled the country and was classified a wanted fugitive in August 2006 by the US

Federal Bureau of Investigation The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice ...

. On 27 September 2006, he was arrested in

after hiding in

Windhoek Windhoek (, , ) is the capital and largest city of Namibia. It is located in central Namibia in the Khomas Highland plateau area, at around above sea level, almost exactly at the country's geographical centre. The population of Windhoek in 202 ...

with his family, where he had bought a house at a country club. If extradited to the US and convicted, he faced 25 years in prison. He was released on bail and engaged in a long battle to avoid extradition to the US (in Namibia neither money laundering nor options backdating is a crime). Upon leaving the US he had transferred some $64 million to Israel, with most of that ending up in Namibia; another $50 million was blocked by the US government, which overall sought the forfeiture of $138 million of Alexander's assets.Sarna and Malik, ''History of Greed'', p. 327. In April 2010, Alexander won a victory in the

Supreme Court of Namibia The Supreme Court of Namibia is the highest court in the judicial system of Namibia. It is the court of last resort and the highest appellate court in the country. It is located in the city centre of Namibia's capital city, Windhoek. A Supreme ...

that allowed him to continue to live and work there until the extradition request was ruled upon. In November 2010, Alexander agreed to pay the U.S. government $53.6 million to settle the SEC's case against him, with those monies being targeted to settle assorted lawsuits against Comverse by shareholders. Of the other two executives, William Sorin pleaded guilty to criminal charges and was sentenced to a year in prison in 2007. David Kreinberg cooperated with prosecutors, repaid $2.4 million to the SEC, and in 2011 was sentenced to the "time served" of the minimal period he had originally been in custody. While over a hundred companies were investigated or charged with options backdating, Comverse was one of the most visible and was labeled by a pair of financial writers a "poster child for stock option fraud."Sarna and Malik, ''History of Greed'', p. 328.

Continuing difficulties

Recovery from the scandal was difficult. The three charged executives, who had stayed on as consultants, were fired without severance pay, and the company said it would pursue legal action against them. The board of directors was expanded from five to ten, with all new ones being Americans rather than Israelis. A new CEO, Andre Dahan, came on board in April 2007 but the ongoing management crisis prevented the company from engaging in new innovation or entering new business areas. Despite the 2006-2007 economic climate being one of growth, layoffs occurred in mid-2007. Research analysts began speculating that the company might break up. Because of the accounting issues from the option backdating, Comverse Technology was unable to file full or timely financial reports with the SEC. Its stock was delisted from the

on 1 February 2007, and removed from the

and

at the same time. The stock then traded on the Pink Sheets. In 2009, the SEC settled its case with Comverse Technology; the company would not be subject to penalty fines over the backdating matter, but would accept a permanent injunction against itself regarding any future violations of law regarding publicly traded companies. A settlement in a similar case against Ulticom was also reached. The failure to file timely financial reports put the company at risk of having its stock registration revoked; a process deciding this, involving the SEC and an

Administrative Law Judge An administrative law judge (ALJ) in the United States is a judge and trier of fact who both presides over trials and adjudicates claims or disputes involving administrative law. ALJs can administer oaths, take testimony, rule on questions of evi ...

, was still active of 2011. The financial crisis of 2008 and on caused further difficulties for Comverse Technology, with new layoffs occurring in October 2008, March 2009, and August 2009. The company reportedly lost considerable money in 2009, and the moves were typical of other hi-tech companies caught in the bad economic environment. Some of Comverse's products were still viewed highly; a

Yankee Group Yankee Group was an independent technology research and consulting firm, founded in 1970 by Howard Anderson. The firm "was one of the analyst industry’s most prestigious boutiques through the dot.com boom, with 70 analysts on the payroll in 2006 ...

survey ranked them first in the world in their type of billing services, and they were the worldwide market-share leaders in providing multimedia message service centers to wireless carriers. However, the rise in popularity of

smartphone A smartphone is a portable computer device that combines mobile telephone and computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, whi ...

s and of sending

e-mail Electronic mail (email or e-mail) is a method of exchanging messages ("mail") between people using electronic devices. Email was thus conceived as the electronic (digital) version of, or counterpart to, mail, at a time when "mail" meant ...

eroded the carrier market for some of Comverse's products and services. By 2009, the company's upper management was now largely American rather than Israeli, Dahan was under internal criticism, and there were frequent clashes regarding company culture. In early 2010, Comverse Technology planned to release an annual report with full financial statements and return to being fully listed on Nasdaq, but anticipated more layoffs. One piece of positive news in July 2010 was an $80 million investment by well-known entrepreneur

George Soros George Soros ( name written in eastern order), (born György Schwartz, August 12, 1930) is a Hungarian-American businessman and philanthropist. , he had a net worth of US$8.6 billion, Note that this site is updated daily. having donated mo ...

. However, the financial reports were not published and a public announcement was made in August 2010 that the company was short on cash and planning more layoffs. A precipitous drop of the stock price caused the market valuation of the company to fall below $1 billion, and the continued failure to file financial reports put the company at risk of having its stock being delisted completely. CEO Dahan said simply, "These are challenging times." By August 2010, analysts were stating that Comverse Technology might have to break up by selling off its subsidiaries and spin off Comverse's own business units. Running low on cash, Comverse Technology engaged

Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, Ho ...

to explore such possibilities, with several large, well-known technology companies potentially interested in Comverse and some private equity firms possibly interested in Verint. The company had some 4,000 employees, and continued having about half of them employed in Israel and most of the rest in the US and France. The continuing financial reporting problems had cost the company some $500 million in accountants' fees and related costs since 2006 and was the largest drain on its cash position. The fact that senior management awarded itself bonuses in a time of various rounds of layoffs left employees feeling outraged. Comverse's restructuring also affected its 2006-acquired NetCentrex business unit in France, with layoffs or a shutdown possible. In October 2010, Comverse Technology agreed to sell its two-thirds ownership of its Ulticom subsidiary to a U.S. private equity firm for $90 million; the deal closed in December 2010. The company also sold part of its holdings in Verint, netting $80 million, and sold for $27 million land in the hi-tech area of

Ra'anana Ra'anana ( he, רַעֲנָנָּה, lit. "Fresh") is a city in the southern Sharon Plain of the Central District of Israel. It was founded in 1922 as an American-Jewish settlement, 1 km south of the village of Tabsur, where an important ...

, north of Tel Aviv, where it had been planning to build a new headquarters. In October 2010, Comverse Technology finally published its restated financial reports for fiscal years 2005 through 2008. (The company's fiscal year N ran from February of year N to January of N+1.) They revealed that the company lost about $1 billion during that period. In February 2011, the company announced that due to this effort, its report for fiscal 2009 would be delayed, and also that it was restructuring into four independent business units and focusing much of its emphasis on billing systems for mobile carriers. Layoffs also resumed, with more possibly in the offing. In March 2011, revenues for fiscal 2009 were announced at $1.58 billion, down from $1.72 billion two years previously, with an overall loss of $273.3 million. Dahan stepped down as CEO. During his tenure, Comverse Technology stock fell 68 percent in price and 2,000–2,500 employees were laid off; he made more than $20 million during that time and gained payments of some $5 million upon his departure. Overall, his stint as leader of the company was not regarded positively by some in the Israeli business press. The new CEO was Charles Burdick, who had been non-executive chairman of the company. Burdick became the first American to head the company. In April 2011, the company agreed to a $2.8 million settlement with the U.S. government over violations of the

Foreign Corrupt Practices Act The Foreign Corrupt Practices Act of 1977 (FCPA) (, ''et seq.'') is a United States federal law that prohibits U.S. citizens and entities from bribing foreign government officials to benefit their business interests. The FCPA is applicable worl ...

that had taken place between 2003 and 2005. Payments of $536,000 had been made to the

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in order to obtain purchase orders and had been inaccurately reported as sales commissions in Comverse's accounting.

Hopes for recovery

During the first half of 2011, analysts such as Oppenheimer & Co.,

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and

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said that with its accounting problems largely behind it, some restructuring done, and an improving cash balance and some revenue growth, Comverse Technology was well-positioned for ongoing operations or a possible sale. Zacks Investment Research predicted the company would again show a profit for fiscal year 2011. Comverse itself had gained tens of millions in new business, was hiring again in modest numbers, and was at about 4,000 employees, including some on an outsourcing basis. In June 2011, results for fiscal 2010 were announced, finally bringing the company current with its annual audited reporting. Revenues rose to $1.63 billion while the company's net loss was halved to $132.3 million, and the cash position was now stated as being sufficient to meet foreseeable needs. Another positive sign for its recovery came when it was re-listed on NASDAQ in September 2011. In April 2012, results for fiscal 2011 were announced; revenues remained flat at $1.59 billion while the company's net loss decreased again, to $58.7 million.

Restructuring

In August 2012, a series of transactions were announced that would end Comverse Technology as a functioning entity, by making Comverse Network Systems an independent company once again known simply as Comverse, allowing Verint Systems to buy back Comverse Technology's majority stake, and selling off the other subsidiaries. Burdick said, "

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agreement, along with the planned spin-off of omverse Network Systems will result in a tax efficient distribution to our shareholders and direct ownership in two independent, well-capitalized traded companies." Philippe Tartavull was named as the CEO of the newly independent Comverse. Results for fiscal year 2012 for the restructured Comverse, Inc. demonstrated a return to profitability, with a net income of $5.1 million. These restructuring transactions were completed on 4 February 2013 and represented the effective liquidation of the Comverse Technology holding entity. Further actions followed the end of Comverse Technology. During June 2015 Comverse divested its BSS business to Amdocs. In September 2015 after a merger this new Comverse entity changed its name to

, then after a further series of acquisitions and mergers in February 2017 it became part of

Industry recognition

Over the years, Comverse Technology won a number of awards within its industry, including: * 2002 – Technology Marketing Corporation's Product of the Year (for Verint's Ultra IntelliMiner) * 2004 –

CMP Media UBM Technology Group, formerly CMP Publications, was a business-to-business multimedia company that provided information and integrated marketing services to technology professionals worldwide. It offered marketers and advertisers services such as ...

's Product of the Year (for Verint's Ultra Intelligent Recording) * 2004 – CDMA Development Group's Innovative Solutions Award (for Comverse's Multimedia Messaging Service Center) * 2005, 2006, 2007, 2008, 2009 –

Frost and Sullivan Frost & Sullivan is an American management consultant, business consulting firm. It offers market research and market analysis, analysis, economic growth, growth strategy Consultant, consulting, and corporate training and development, training. I ...

's Telecom BSS Vendor of the Year award (for Comverse's business support systems in the Asia Pacific region) * 2007 – International Engineering Consortium's Best VoIP Product or Service Award (for Comverse's Converged IPCentrex solution) * 2007 – Technology Marketing Corporation's IMS Leadership Award (for Comverse's Converged Messaging Solution) * 2007 – International Engineering Consortium's InfoVision Awards for Best New Product (for Comverse's Converged Billing Suite) * 2007 – Technology Marketing Corporation's Internet Telephony Excellence Award (for Comverse's MyCall Converged Communications product) * 2009, 2010 – Technology Marketing Corporation's Internet Telephony BSS/OSS Excellence Award (for Comverse's ONE Billing & Active Customer Management package) * 2010 – Virgo Publishing's Excellence Award for Best Cost Management Implementation (for Comverse's Business Support System product)

Bibliography

* * * *

References

External links

Former official Comverse Technology website
{{Good article Software companies of Israel Software companies based in New York (state) Telecommunications companies of Israel Computer companies established in 1982 Technology companies established in 1982 Companies disestablished in 2013 Companies based in Nassau County, New York Companies formerly listed on the Nasdaq 1982 establishments in Israel Mergers and acquisitions of Israeli companies Software companies of the United States