Greenlight Capital's fourth quarter positions

Part 8
Greenlight Capital's fourth quarter positions (Part 8 of 8)

David Einhorn raises Greenlight Capital’s stake in Amdocs

Greenlight Capital and Amdocs

Greenlight increased its 1% position in Amdocs (DOX) in 3Q 2013 to 1.30% of the fund’s portfolio last quarter. The position was initiated in 2Q 2013. Amdocs Limited provides software and services for communications, media, and entertainment industry service providers.

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Amdocs reported results that beat street estimates for 1Q 2014. Revenue was $864.0 million, up 2.2% sequentially from the fourth fiscal quarter of 2013 and up 4.6% compared to last year’s first fiscal quarter. Net income on a non-GAAP basis was $122.6 million, or $0.76 per diluted share, compared to non-GAAP net income of $119.4 million, or $0.73 per diluted share, in the first quarter of fiscal 2013. The company announced a quarterly dividend of 0.155 per share, representing a $0.62 annualized dividend and a dividend yield of 1.47%.

Amdocs said:

  • “North America was strong as we supported our key customers, including AT&T, in their strategic initiatives as competition amongst carriers becomes increasingly fierce. In Europe, recent wins contributed to year-over-year growth in the region for the first time in five quarters.”

Emerging markets, however, continued to slide as the lumpiness of deals in the region led to an ~11% fall in revenue both year-over-year and sequentially.

The company completed the acquisition of Celcite on January 1, 2014, and said the post-merger integration of Actix is underway. Amdocs said both of these acquired companies secured new customer wins during the first quarter. The company recently announced the Amdocs Self-Optimizing Networks (or SON) solution, which automates the optimization of radio access networks. The acquisitions of Actix and Celcite have provided Amdocs with an impressive installed base of existing customers—making Amdocs an independent provider of vendor-agnostic SON solutions.

As mobile network traffic continues to soar, Amdocs SON gives mobile service providers a solution to manage increasingly complex heterogeneous networks (HetNets), maximize capacity utilization, and improve network performance and quality for its customers. The release noted that in Latin America, four mobile service providers are deploying the Amdocs SON solution, including TIM Brasil, which will use the solution in select Brazilian cities hosting the World Cup soccer games.

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Amdocs expects that revenue for the second quarter of fiscal 2014 will be approximately $880 million to $910 million. GAAP diluted earnings per share for the second fiscal quarter will be $0.61 to $0.69.

JP Morgan said in a recent note that a “coordinated, global recovery and possible carrier consolidation could bode well for the stock.”

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