Openwave Systems, Inc. (OPWV)

Openwave’s performance continues its reducing trend in the third quarter fiscal 2007. For the nine months ended 31 March 2007, revenues observed a decline of 23% to $246.4 million. The fall can be attributed primarily to reduction in License revenue, while lower maintenance & support and sale of Systems segment further contributed to the decline. Net Income tally was also hampered by the drop in the top-line, as Net loss totaled to $72.8 million, compared to a profit of $10.3 million a year ago. The drop in margins was the key reason for the loss, while existence of stock option review and related cost further added fuel to the fire.





The company in the current quarter completed acquisition of WiderWeb, a leading developer of mobile web access solutions for $5 million in cash. The acquisition adds an open internet browsing solution that re-formats web content for mobile phones, to Openwave’s already growing product portfolio, though this acquisition is not likely to have an impact on the revenue tally of Openwave in fiscal 2007.





Openwave recently announced that it has hired Merrill Lynch to consider strategic alternatives, including the possible sale of the company. Given the turmoil in the company related to resignation of the CEO and stock option review this can be cited as a move by the board to generate a healthy return for the investors. However when the uncertain product outlook, falling margins and massive reducing in 2007 and 2008 guidance is considered, it will be highly unlikely that Openwave will generate a huge premium on its sale, and it might be better to part ways with the company.