We reiterate our long-term Neutral recommendation on
). The company reported mixed financial results for the third
quarter of fiscal 2013. While the bottom line surpassed the Zacks
Consensus Estimate, the top line fell below the same. Amdocs
currently has a Zacks Rank #3 (Hold).
Why Kept at Neutral?
Amdocs is well positioned in the market as carriers sell
bundled and converged IP-based network solutions to their
subscribers. As the network became more complex, carriers started
spending more on customer care and billing software. Amdocs
offers integrated customer management systems, which are
essential for carriers to prevent customer churn. Huge
opportunities exist for Amdocs as more telecom companies started
deploying 3G/4G networks.
Amdocs has the largest customer base and the broadest product
line in the industry, including a full suite of end-to-end
solutions for both Business Support Systems (BSS) and Operations
Support Systems (OSS). The total order backlog was $2,830 million
at the end of the third quarter of fiscal 2013.
Amdocs' business opportunity in the U.S. is more visible after
stabilization of businesses with
) and renewal of long-term contracts with several leading telecom
and cable TV operators like
). Recently, the U.K. wireless giant
Vodafone Group plc.
) has signed a 5-year global managed services agreement with
Amdocs to optimize its customer care and billing activities.
Nevertheless, Amdocs is exposed to the global economic
downturn, particularly those events that affect the
telecommunications industry. The macroeconomic scenario is yet to
recover completely. In addition, delay in business transformation
on the part of the carriers may reduce capital spending. Economic
and political uncertainty in Europe may jeopardize the company's
financials, going forward. Furthermore, as the company is
operating globally, it is also exposed to foreign currency
exchange rate risk.
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