) posted mixed financial results for the third quarter of fiscal
2012, beating the Zacks Consensus Estimates. Management provided an
improved financial outlook for the rest of fiscal 2012.
Amdocs offers a portfolio of several industry-leading technology
integration products for managed services and large
transformational project. Despite facing a volatile global economy,
the company is successfully executing its operations across
geographies. Going forward, it is expected that the company will
benefit as telecom carriers have started deploying 3G and 4G
Moreover, Amdocs provides a full suite of end-to-end solutions
for both Business Support Systems (BSS) and Operations Support
Systems (OSS). Recently, Amdocs signed its first major managed
services deal in Latin America with TIM Brasil. Further, Amdocs has
also signed an important new managed services contract with a large
wireless operator in Europe.
Other than telecom, Amdocs has a strong foothold in the cable TV
industry as well. In a significant contract win, Amdocs recently
extended its existing business agreement with
), the largest cable Multi Service Operator (MSO) in the U.S.
The extension period is for a multi-year period, during which
Amdocs will supply various products from its CES platform.
Furthermore, the company has extended its existing deal with
), the largest satellite TV operator in the U.S., for another 5
years for several additional activities.
One of the main drawbacks of Amdocs is its ongoing business
fluctuations with its largest customer
). AT&T has either terminated or postponed several
transformational deals with Amdocs, after its failed attempt to
acquire T-Mobile USA. AT&T accounts for about 27% of the
company's total revenue.
For fiscal 2012, management expects revenue from AT&T to be
down by mid-single digits. The company may face severe top-line
volatility if it fails to restore its previous revenue run rate
In an effort to boost sales, which may result in a drop in
margins, Amdocs is investing heavily in the emerging markets. Even
in the developed markets, management has decided to undertake a
series of programs including training, knowledge transfer and
productivity enhancement in order to cope up with recessionary
situations. All these activities will result in bottom-line
shrinkage that may continue in fiscal 2012.
We maintain our long-term Neutral recommendation on Amdocs.
Currently, the shares of DOX have a Zacks #3 Rank, implying a
short-term Hold rating.
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