NICE takes nasty fall
NICE Systems CFO Ran Oz: It’s business as usual.
Gitit Pincas 14 Jun 06 16:52
It’s not every day that a stock like NICE Systems Ltd. (Nasdaq: NICE; TASE: NICE) falls nearly 10% in heavy trading. In fact it’s pretty rare. All in all, since the company got itself on track, volatility has only been felt over time, and upwards of late. But NICE fell 9.7% on Wall Street yesterday on an especially large volume, while the Nasdaq fell just 0.9%. NICE’s market cap is now $1.1 billion after the fall.
What happened? As usual, when there’s no information, investors grasp any bit of news they can, even if it’s unreliable. Since yesterday, we’ve heard assessments from a number of sources that NICE - like dozens of other foreign companies as well as Israeli ones such as Comverse Technology Inc. (Nasdaq: CMVT), Mercury Interactive Corp. (Pink Sheets:MERQ), and even M-Systems Flash Disk Pioneers Ltd. (Nasdaq: FLSH) - has set up an internal committee to investigate the granting of options at the company.
Other capital market sources say this is utter rubbish, and attribute the drop in NICE’s share to a number of large institutions reducing their holdings in the company. This will be known only for certain in a few weeks, when these institutions send their reports to the US Securities and Exchange Commission (SEC).
Are any of the rumors correct? Why did the share fall?
“I’ve no idea. We are not aware of any developments,” said NICE Systems corporate VP and CFO Ran Oz today. “What you’ve said are market rumors, and we won’t comment about them or deal with them. We’re now on a road show, and we’ll attend a large number of conferences over the next two weeks. We have no intention of changing our plans. As far as we’re concerned, it’s business as usual.”
NICE specializes in multimedia recordings and quality management. The company’s solutions are used to record conversations, supervise and secure dealing rooms, casinos, and airports, and for other security purposes. Insofar as the rumors about an internal inquiry about options were behind part of the fall in NICE’s share, it seems that this is something unsubstantiated, and attributable to Wall Street’s current witch-hunt atmosphere, in which any company can become a convenient target for an options scandal. When the general market sentiment is negative such rumors fall on eagerly receptive ears.
Oz says, “Without referring to the specific rumor about the options, whatever it is, it should be remembered that we held an offering on Wall Street just six months ago. Highly respected underwriters were involved in that offering, and top-of-the-line attorneys conducted thorough due diligence on the company. This was after the various options scandals erupted and Mercury’s leadership was ousted. These scandals worried investors, also option were given special attention. We’re therefore calm.”
In December 2005, NICE raised $201 million its third offering. JP Morgan Securities Inc. and Banc of America Securities LLC acted as joint book-running managers. CIBC World Markets and UBS Investment Bank acted as co-lead managers for the offering and RBC Capital Markets and William Blair & Company acted as co-managers.
M-Systems, run by chairman, president and CEO Dov Moran, is now planning to hold an offering. It seems that during the underwriters’ examination stage, M-Systems decided to review its options, and announced the establishment of a committee for this purpose.
The likeliest reason for the fall in NICE’s share is a sell-off by large institutions. Over the past 18 months, the company’s holding structure has changed. Today, Fidelity Management and Research (FMR Corp.) owns 6.62% of NICE, Fidelity International Ltd (Bermuda) owns 5.92%, and Massachusetts Financial Services Co. owns 8.7%. Investors of this kind naturally increase and reduce their holdings on a regular basis, and it cannot be ruled out that they did so recently.
Published by Globes [online], Israel business news - www.globes.co.il - on June 14, 2006