Home > Boards > US Listed > Electronics and components > NICE-Systems Ltd. (NICE)

“It’s part of a strategy”

Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
midastouch017 Member Profile
 
Followed By 112
Posts 24,622
Boards Moderated 7
Alias Born 02/07/04
160x600 placeholder
NICE Satmetrix Selected by Financial Services Company Midland States Bank to Build a Unified Customer-Centric Culture with a ... Business Wire - 10/21/2020 6:30:00 AM
Leading European Bank Uses NICE Authentication to Improve Security and Customer Experience Business Wire - 10/20/2020 6:30:00 AM
NICE Investigate Brings Digital Cloud Transformation to Lancashire Constabulary to Provide Faster, More Efficient Investigati... Business Wire - 10/19/2020 6:30:00 AM
NICE inContact CXone Stays Ahead of Fast-Changing Customer Expectations with Innovative Features that Fuel Modern Contact Cen... Business Wire - 10/15/2020 6:30:00 AM
UK’s Cleveland Police Selects NICE Investigate for Digital Evidence Management Process Transformation in the Cloud Business Wire - 10/14/2020 6:30:00 AM
NICE to Showcase Strategies for Driving Agile Customer and Employee Experiences Business Wire - 10/13/2020 6:30:00 AM
NICE Recognized as a Robotic Process Automation Leader in Everest Group's PEAK Matrix for Third Consecutive Year Business Wire - 10/12/2020 6:30:00 AM
NICE Actimize Announces ENGAGE LIVE, The Largest Virtual Financial Crime Risk Management Customer Event of the Year, Focused ... Business Wire - 10/5/2020 7:00:00 AM
Securities Registration: Employee Benefit Plan (s-8) Edgar (US Regulatory) - 10/1/2020 6:07:45 AM
NICE Announces the 2020 PSAPs’ Finest Award Winners Honoring Dedicated Emergency Communications Professionals Business Wire - 9/22/2020 6:30:00 AM
NICE Actimize Achieves Highest Score in Aite Group’s Global Fraud and Money Laundering Case Management Report Business Wire - 9/17/2020 6:30:00 AM
NICE Robotic Process Automation Ranked the Market Leader in Attended RPA by Zinnov, Driven by NEVA and Unparalleled AI Business Wire - 9/16/2020 6:30:00 AM
NICE inContact CXone Delivers Best-In-Class Contact Center Capabilities to Ergon Energy Retail Business Wire - 9/15/2020 6:30:00 AM
NICE Honors CX Excellence Award Winners at Interactions Live, Celebrating the Delivery of Exceptional Experiences & CX Agilit... Business Wire - 9/14/2020 6:30:00 AM
Report of Foreign Issuer (6-k) Edgar (US Regulatory) - 9/10/2020 8:30:54 AM
NICE Announces Interactions Live, The Industry’s Biggest Customer Experience Virtual Event & its Lineup of Award-Winning Ce... Business Wire - 9/1/2020 6:30:00 AM
Independent Research Firm Names NICE inContact CXone a Leader in Cloud Contact Center Evaluation Business Wire - 8/26/2020 10:37:00 AM
NICE Announces Pricing of Offering of $400,000,000 of 0% Convertible Senior Notes Due 2025 Business Wire - 8/24/2020 8:15:00 PM
NICE Announces Proposed Offering of $400,000,000 of Convertible Senior Notes Due 2025 Business Wire - 8/24/2020 7:23:00 AM
NICE Actimize Unveils Xceed, a Next-Generation AI-Powered Financial Crime Risk Management Cloud Platform Business Wire - 8/19/2020 6:30:00 AM
Report of Foreign Issuer (6-k) Edgar (US Regulatory) - 8/18/2020 12:47:18 PM
Report of Foreign Issuer (6-k) Edgar (US Regulatory) - 8/6/2020 4:07:20 PM
Report of Foreign Issuer (6-k) Edgar (US Regulatory) - 8/6/2020 7:04:50 AM
NICE Reports 30% Cloud Growth for Second Quarter 2020 Business Wire - 8/6/2020 5:30:00 AM
NICE inContact Ranked as the Market Leader in Omdia Multichannel Cloud Contact Center Solution Decision Matrix Business Wire - 8/5/2020 6:30:00 AM
midastouch017   Monday, 05/01/06 12:09:26 PM
Re: None
Post # of 45 
“It’s part of a strategy”
NICE CEO Haim Shani explains the latest acquisitions.


Gitit Pincas 1 May 06 16:51

At the end of 2005, NICE Systems (Nasdaq: NICE; TASE: NICE) raised $200 million on Nasdaq and said the money would be used primarily to make acquisitions. It was obvious that a company like NICE does not need $411.6 million in cash and that it was only a matter of time until the identity of the acquired companies would be revealed. Last week the company reported it acquired two US companies, IEX Corporation, for which it paid $200 million, and the smaller Performix Technologies, for $13.2 million, a price that may increase by $6.2 million, on the basis of certain performance criteria.
NICE specializes in multimedia content quality management solutions. The company’s applications are used in digital recordings, dealing room security and monitoring, casinos, airports and other security-related uses. NICE has a market cap of $1.3 billion on Nasdaq and it has raised its full year guidance for 2006, incorporating the expected contribution of the acquisitions for the second half of the year.

IEX is a wholly owned subsidiary of Tekelec (NASDAQ: TKLC) and has a market cap on Nasdaq of $955 million. It develops workforce management, strategic planning and performance management solutions for the contact center market. Its main flagship product, TotalView, provides a high-end centralized solution that compiles data seamlessly across the enterprise, enabling more accurate and effective forecasting, planning and scheduling. Performix also develops call center solutions enabling effective performance management. The deals are expected to close at the end of the second quarter or the start of the third quarter of 2006.

In a recent interview with “Globes”, NICE CEO Haim Shani said that the acquisitions were part of the company’s plans. “It’s part of our strategy. TCS, for example, was company which appeared on our list of possible acquisitions as did most of the companies we have acquired in recent years. It didn’t just appear from nowhere.” It is therefore likely that IEX was one of the names on NICE’s list of acquisitions at the time of its share issue last year.

”The closure of the two acquisitions within two hours of each other was a matter of planning but primarily a lot of good luck,” says Shani today. “Both companies appeared in our growth strategy plan. We detected upfront the points we wanted to strengthen and consolidate through acquisitions and we informed the market that we would use the money raised for this purpose.” The IEX acquisition was accompanied by investment bank Bank of America, which was also one of the lead underwriters for NICE’s share issue, its fourth. Shani says the talks for the acquisition continued for several months, although the relationship with IEX goes back even further.

NICE believes that it has “redefined the market of contact center business performance & analytics with the acquisitions of IEX and Performix,” and this was the headline of its announcement to investors. “The contact center market is a multibillion dollar market,” says Shani. “If we take a typical call center, its main suppliers will be companies such as Avaya Inc., (NYSE:AV), Nortel Networks (NYSE: NT) and Cisco Systems (Nasdaq: CSCO) which provide the telecommunications equipment. After them will be companies such as Siebel (Nasdaq: SEBL) and SAP, which will provide the customer relations management (CRM) software.

"The next stage is the buying of products and technologies such as systems for digital recording and quality management, voice analysis, and human resource planning and management such as ours. Previously, the entire third line was divided into segments. We can now say that we offer everything within the third line range and anyone who wants to buy call center accessories can get them from a company whose product range covers all his requirements. We can provide a uniform picture of everything taking place in a business.”

IEX posted annual sales of $50 million. In its conference call, NICE also noted that IEX has an EBITDA rate (earnings before interest, taxation, depreciation and amortization) of 40%, or in other words, an EBITDA multiple of 10. It has 1,000 customers and has an overlap of 10-20% with those of NICE. Shani adds that IEX has a growth rate, in excess of 10%. Performix, on the other hand, is a start-up with annual sales of $5 million. The company is, naturally, not profitable, and was acquired by NICE primarily because of its technology.

IEX employs 170 people while Performix employs 40. Shani says that as the choice of acquisitions was not designed to achieve synergy, NICE intends to retain all the employees and management who will continue to lead the current activities.

”IEX brings with it highly profitable operations, and while this was not the sole consideration in our decision to acquire the company, it is still important,” says Shani. “The overlap between our customers and theirs is not large and we will certainly gain new customers in the telecommunications and financial service sectors, to whom we can offer our existing products. In the short term, we have here a good opportunity for cross sales.” NICE defines the companies’ fields of activity as ‘Insight from Interactions.’

Globes: $200 million is a lot of money. How do you know that this is not too expensive?

Shani: “In the software market, a multiple of 10 is very attractive and this is reflected by our guidance to the market, in which we said we expected the deal to add to our top line in 2006. We assured our investors that the acquisitions would deliver profit in the short term and in this market things move very fast. On the basis of the average profit and revenue multiples, we paid a fair price. As regards Performix, this is a start-up which has received substantial investment but is not making a profit so there would be no point in talking in terms of multiples where it is concerned. We bought it mainly for the technology, which has been on the market for some years and is now reaching maturity with a number of key customers.”

NICE believes that if the deals close on schedule, they will add $28-30 million to its top line for 2006, increasing its sales to $395-400 million. The previous forecast was for $367-375 million. NICE expects pro-forma earnings per share to increase to a range of $2-2.12 a share ($43.3-45.9 million), against the previous forecast of $1.9-2 a share.

The acquired companies are both considered leaders in their fields. IEX is a competitor of Blue Pumpkin, which was acquired by a rival of NICE, Witness Systems (NASDAQ: WITS) at the beginning of 2005 for $75 million. Performix competes with Opus Group, which was acquired by Verint Systems (Nasdaq: VRNT) for $12 million.

”IEX is a competitor of Blue Pumpkin but it is twice the size,” says Shani. “They are rivals but with different nuances. I would say that IEX is the sector’s Rolls Royce while Blue Pumpkin came in as middle market player. There is no comparison between the business, product range and profitability of the two companies, since Blue Pumpkin has had sales of around $30 million and has not made a profit. Opus and Performix are not exactly competitors since Opus Group is more of a service company.”

So are in fact these acquisitions the answer to Verint and Witness?

”Not exactly. Our rationale led us to believe that we have an opportunity here to create a new market. We are number one in digital recordings and voice monitoring and analysis, and we now have the umbrella that brings everything together. We think that there is the potential for a large market in contact centers and I don’t think this is Witness’s strategy. It hasn’t mentioned it, even if everything is possible on paper. On the other hand, we obviously understand that things are not static, and if we take the lead in this market, others will follow us.”

Published by Globes [online], Israel business news - www.globes.co.il - on May 1, 2006

Dubi


Public Reply | Private Reply | Keep | Last ReadPost New MsgNext 10 | Previous | Next
Follow Board Follow Board Keyboard Shortcuts Report TOS Violation
X
Current Price
Change
Volume
Detailed Quote - Discussion Board
Intraday Chart
+/- to Watchlist
Consent Preferences