Amdocs earnings up 25%, secures Sprint contract

As tech stocks began to slide this week due to poor earnings reports coming from Silicon Valley, St. Louis-based Amdocs reported first quarter revenue growth of 25% over last year’s first quarter to $587 million.

Amdocs ended the quarter (Dec. 31) with free cash flow of $69 million and it started its next quarter with good news from Sprint Nextel. The Sprint Nextel account had been up for grabs as the operator was making decisions on consolidating its back office. Amdocs was battling it out with Convergys, but Amdocs won. It will now provide Sprint Nextel with a single platform to support its more than 45 million wireless subscribers. Amdocs expects to hit $600 million in the second quarter.

“This is significant not only because it is a very large project, but it is a great example of the transformation happening in the industry and a strategic win for us in the context of the competitive environment that we operate,” said Mike Couture, vice president marketing at Amdocs.

The company's net income was $75.3 million, compared to a net income of $69.4 million in the first quarter of fiscal 2005.

Dov Baharav, CEO of Amdocs Management Ltd., said the quarter highlighted the fact that service providers are looking for an integrated, best-of-suite offering that allows them to leverage their existing investments in order to cope with consolidation and industry convergence.

New business for Amdocs in the quarter came from mobile virtual network operator (MVNO) activity, a new wireless deployment in Europe and growth in its existing AT&T and BellSouth relationships including Yellowpages.com.

A good part of Amdocs’ 25% revenue growth was a result of the $238 million acquisition of DST Innovis, which Amdocs completed in July of last year. The rest came from strong growth of the baseline business, Couture said.

He said that Amdocs signed no major new contracts in the quarter that crossed the OSS/BSS areas of billing, customer relationship management, ordering and fulfillment and customer support.

With more consolidation down the road, Amdocs is hoping its performance at Sprint Nextel bodes well for the future.

“We said for a while, and believe, that the trend of consolidation is good for Amdocs. We have been very successful in dealing with the issue of consolidating systems and successfully migrating customers,” Couture said. “We partnered with Cingular to manage a successful post merger migration and conversion of subscribers with AT&T Wireless. So with our track record, we think it bodes well for other consolidation projects here in the U.S. and increasingly in Europe.”