Comverse investors demand new leadership

A hedge fund that owns 4.1 million shares -- about five percent -- of Comverse Technology Inc. this week made public a statement saying a majority of the company's board of directors should be replaced because it has made costly mistakes.

The hedge fund, Cadian Capital Management Llc, said it delivered a letter Monday to Comverse, a Manhattan company with a majority ownership of Melville-based Verint Systems Inc. The letter said mismanagement, poor hiring decisions and improper strategic decisions concerning subsidiary spinoffs had cost Comverse shareholders more than $2 billion in potential value.

Referring to its Verint subsidiary, the hedge fund said Comverse's operations as a holding company harmed "a quality asset held in strategic limbo in a market with substantial opportunities for revenue growth and margin expansion."

Verint makes software that allows businesses and government agencies to sift through vast amounts of data from telephone calls and surveillance cameras and provide insight on potential problems.
Paul Baker, vice president for communications at Comverse, said Tuesday the company did not wish to comment.

Cadian, of Manhattan, said that in the past year, the board has pursued "several misguided and / or ill-executed strategies that have continued to prevent the company from realizing value for shareholders," including a failure to hire and retain "world-class senior management."

Comverse Technology, or CTI, is now structured as a holding company. Its other major component, other than Verint, is a wholly owned subsidiary, Comverse Inc. -- which is expected to be spun off later this year into a stand-alone, publicly traded enterprise. In that spinoff, CTI said, its shareholders will receive distributions of the new company's stock.

The Comverse Inc. unit makes software for telecom service providers, enabling them to merge billing and customer management operations.

CTI, based in Manhattan, has made major steps in emerging from a years-long scandal centered on alleged options backdating by a former chief executive, Jacob "Kobi" Alexander. It has a total of 5,900 employees, 3,100 of whom work for Verint.
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