Syniverse Holdings: When in roam
Feeling a little overwhelmed with your communications options? Syniverse Holdings Inc. (NYSE:SVR) wants its customers — and its customers’ customers — to become masters of their mobile communications universe.
Based in Tampa, Fla., the company has grown over the past 21 years — the past three as a public company — to enable communications companies to provide interoperability among their voice and data networks. Syniverse sells the goods that let you “roam” on cell phones in the United States and in many other countries. Its back-office telecommunications technology also delivers number portability when customers switch carriers.
Syniverse hasn’t given investors many reasons to roam despite the difficult stock market. The stock is down 5.7% year to date, and down about 6% in the past three months. Syniverse has struggled to regain the 52-week high of $22.93 seen on May 19, while its recent low was recorded on Jan. 9, when shares sank to $13.50.
Analysts who cover Syniverse remain positive about its prospects. Of the 11 surveyed by Thomson Reuters, two have the stock as a “strong buy,” five rate it a “buy,” and four call it a “hold.” On Monday, Syniverse closed at $14.69.
Syniverse’s roots go back to 1987, when it was created as GTE Telecommunication Services, a unit of GTE to work on the need for wireless telephone roaming. Two years after Verizon (NYSE:VZ) was formed from the merger of GTE and Bell Atlantic, the unit’s managers and an investor group acquired the business, which had its initial stock offering in 2005. Since early 2006, Terry Holcombe has served as president and chief executive.
Syniverse has felt the need to roam, too, with an emphasis on going global. Syniverse has some 600 customers in more than 120 countries, yet last year Syniverse still derived 78% of its business from North America. Last December, Syniverse completed the $294 million acquisition of a former German competitor, BSG Wireless.
And Syniverse got the message: mobile data is a big growth area, and its technology push is growing there as well.
From 2003 through 2007, Syniverse saw its annual revenue increase 135%, to $378 million, while full-year net income did slide 42% to $52.4 million. The company said its top 10 customers accounted for nearly half of its 2007 revenue.
For the three months ended June 30, Syniverse reported a 40% rise in revenue to $127.6 million with net income climbing 74.4% to $20.4 million. The company did report $3.3 million in charges from the BSG acquisition, but also $3.7 million in “cost synergies.”
In its Aug. 4 release of midyear results, Syniverse did raise its full-year guidance, which now calls for net revenue of $485 million to $495 million and net income of $69 million to $74 million. The company, which has not backed down from those estimates despite the market turmoil, reports Q3 results on Nov. 5.
The company also has settled some unfinished business, announcing earlier this month a three-year contract extension with Verizon. In an Oct. 7 note, Deutsche Bank’s Tom Ernst Jr. reiterated his “buy” rating and a $27 price target after Syniverse announced what he called a “long-awaited renewal.” Similarly, Amir Rozwadowski at Barclays Capital said Verizon “renewed all of the services provided, demonstrating, in our view, its core partnership with SVR.” Rozwadowski rates Syniverse an “overweight” with a $22 price target.
Market volatility aside, Syniverse Holdings is one stock about which investors might phone home about.
Based in Tampa, Fla., the company has grown over the past 21 years — the past three as a public company — to enable communications companies to provide interoperability among their voice and data networks. Syniverse sells the goods that let you “roam” on cell phones in the United States and in many other countries. Its back-office telecommunications technology also delivers number portability when customers switch carriers.
Syniverse hasn’t given investors many reasons to roam despite the difficult stock market. The stock is down 5.7% year to date, and down about 6% in the past three months. Syniverse has struggled to regain the 52-week high of $22.93 seen on May 19, while its recent low was recorded on Jan. 9, when shares sank to $13.50.
Analysts who cover Syniverse remain positive about its prospects. Of the 11 surveyed by Thomson Reuters, two have the stock as a “strong buy,” five rate it a “buy,” and four call it a “hold.” On Monday, Syniverse closed at $14.69.
Syniverse’s roots go back to 1987, when it was created as GTE Telecommunication Services, a unit of GTE to work on the need for wireless telephone roaming. Two years after Verizon (NYSE:VZ) was formed from the merger of GTE and Bell Atlantic, the unit’s managers and an investor group acquired the business, which had its initial stock offering in 2005. Since early 2006, Terry Holcombe has served as president and chief executive.
Syniverse has felt the need to roam, too, with an emphasis on going global. Syniverse has some 600 customers in more than 120 countries, yet last year Syniverse still derived 78% of its business from North America. Last December, Syniverse completed the $294 million acquisition of a former German competitor, BSG Wireless.
And Syniverse got the message: mobile data is a big growth area, and its technology push is growing there as well.
From 2003 through 2007, Syniverse saw its annual revenue increase 135%, to $378 million, while full-year net income did slide 42% to $52.4 million. The company said its top 10 customers accounted for nearly half of its 2007 revenue.
For the three months ended June 30, Syniverse reported a 40% rise in revenue to $127.6 million with net income climbing 74.4% to $20.4 million. The company did report $3.3 million in charges from the BSG acquisition, but also $3.7 million in “cost synergies.”
In its Aug. 4 release of midyear results, Syniverse did raise its full-year guidance, which now calls for net revenue of $485 million to $495 million and net income of $69 million to $74 million. The company, which has not backed down from those estimates despite the market turmoil, reports Q3 results on Nov. 5.
The company also has settled some unfinished business, announcing earlier this month a three-year contract extension with Verizon. In an Oct. 7 note, Deutsche Bank’s Tom Ernst Jr. reiterated his “buy” rating and a $27 price target after Syniverse announced what he called a “long-awaited renewal.” Similarly, Amir Rozwadowski at Barclays Capital said Verizon “renewed all of the services provided, demonstrating, in our view, its core partnership with SVR.” Rozwadowski rates Syniverse an “overweight” with a $22 price target.
Market volatility aside, Syniverse Holdings is one stock about which investors might phone home about.
About the Author
Contributing author Paul Rolfes is assistant business editor at The Courier-Journal, the largest daily newspaper in Kentucky.
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