Openwave Systems, Inc. (OPWV)

OpwvOptionsGuy (78.91) Submitted: 10/09/06 6:57 PM

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Openwave (symbol: OPWV) is on the auction block. The annual analyst day was pushed out from late July to November. Wagging tongues inside the industry are certain that the company will be acquired before then and the underperforming CEO was given an ultimatum by the BOD to sell the company or be fired (preference given to selling since Openwave does not have enough cash for a major restructuring by a new CEO).

No sense having an analyst day in July if the plan is to sell the company before the end of the year. There should be a healthy buyout premium since the industry is consolidating and Openwave is clearly small enough ($900 million market cap with $400 million cash, cash flow positive already, $400 million sales) to be swallowed up by any number of other mega-cap tech firms and still be considered a rounding error for the acquirer. (Motorola paid a 246% premium for TTPCom).

In my opinion, Google and Research in Motion are both kicking the tires. CEO wants to announce a buyout before the November analyst day. He has already fired the rest of the senior execs and leased out excess office space in preparation for a merger.

Openwave is one of the only pure play wireless software / content providers left. Recent acquisitions of competitors imply an $18 buyout price. This is the most undervalued name in tech today -- even without a buyout.

I used to work in SiValley as a computer engineer in a past life and am very familiar with Openwave's products and customers (I did consulting work for Cingular and Verizon Wireless).

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