Amdocs: OSS deployments steady, but larger transformation projects may slow

Back-office bellwether Amdocs met revenue estimates but reported a drop in fiscal fourth-quarter earnings, noting it has yet to see a significant slow-down in OSS deployment activity with its service provider customer base. However, it warned that global economic conditions posed a concern for next year.

The company also announced the $60 million acquisition of Changing Worlds, a provider of personalization and portal solutions for mobile operators.

On the earnings front, total revenue for the quarter rose 13.6% to $825 million from $727 million in the year-ago quarter. (Analysts expected revenue of $829 million.) Amdocs cut revenue expects for fiscal first quarter 2009 to between $785 million and $810 million. Earnings per share for the fourth quarter, meanwhile, were $0.54 versus $0.54 a year ago; analysts expected the company to earn $0.62 per share for the quarter.

“We are not seeing cancellation of existing commitments. And in fact, in recent weeks, we have continued to sign new important deals,” said Dov Baharav, president and CEO, in the company’s earnings call late Wednesday, noting that the managed services aspect of Amdocs’s business, which drives recurring revenue, along with a solid backlog of new business, would help it through what he called “unprecedented market conditions.”

With managed services, “we help our customers to save money in this tough period,” Baharav said. “So we expect this segment of our activity to grow.”

Less clear at this point is ongoing carrier commitments to large-scale OSS/BSS transformation projects, which typically roll out over a long, three-to-five-year time frame. Many global carriers are in the midst of such projects now, as next-generation IP and wireless-based networks require new back-office systems and changing business models demand a more nimble telco back office. “In this environment, it is likely that the pace of transformational projects will slow,” Baharav said.

Amdocs said it expects the cable and satellite provider portions of its business will be less affected by economic conditions and reported accelerated growth in those areas. In the fourth fiscal quarter, Comcast chose Amdocs as its next-generation customer care, billing and OSS vendor, deploying Amdocs CES 7.5 and the vendor’s new Enterprise Product Catalog platform. Also in the quarter, Amdocs signed a six-year agreement with MetroPCS for customer support systems and managed services as well a consolidated billing deal with German mobile services provider Debitel.