COMPANIES TO WATCH
(FORTUNE Magazine) – COMVERSE TECHNOLOGY -- Comverse Technology didn't wait for a wake-up call to meet demand for telecommunications in Asia and Latin America. It began concentrating on foreign markets five years ago, and now, says Alex Cena, an analyst at Lehman Brothers, ''it has an expertise that rivals companies many times its size.'' The company, in Woodbury, New York, designs and manufactures Trilogue, a computer-operated voice-message system. Trilogue supplies what is known as virtual telephone service, a message system for less developed countries, where telephone hookups are rare and costly. Customers who do not own phones can rent an electronic mailbox that takes voice messages 24 hours a day. They can retrieve messages by calling their mailbox number from a public phone. Telefonos de Mexico bought Trilogue to provide virtual phone service to 10,000 customers in three Mexican cities. And Comverse recently won a $7.5 million contract in China, where service will begin in nine cities later this year. AT&T chose Trilogue over its own technology for a new message system called Ovation, which it will soon introduce in Europe and Latin America. Comverse does nearly all its manufacturing in Israel, where it can take advantage of government subsidies and tax credits for high-tech industries. Analyst Cena expects 1993 net income to jump 105%, to $11.7 million, on a 71% increase in revenues, to $64 million. The stock got a boost from a one-for-ten reverse split in February; it traded recently at $16.25 a share, or 27 times Cena's estimate for 1993 earnings per share. The company can hardly be accused of sticking to a single successful product. Three years ago it introduced a line of surveillance equipment called AudioDisk, used by police and intelligence agencies to record and store wiretap data. AudioDisk now accounts for just over half Comverse's sales. Old methods of wiretapping relied mostly on reel-to-reel tape recorders. AudioDisk uses technology similar to that of compact disks to record digital signals. It can monitor hundreds of telephone and fax machine lines simultaneously, and retrieve data instantly, much the same way that a CD player can be programmed to play a specific piece of music. For obvious reasons, Comverse declines to discuss its AudioDisk customers. But the company believes the business will continue to grow, mainly because there are so few direct competitors in the digital surveillance market. SHOWBIZ PIZZA TIME -- Move over, Mickey. Another popular rodent is a rat with a preference for cummerbunds who not only sings and dances but cooks pizza too. Chuck, as he is called, is in costume with his barnyard friends at the Chuck E. Cheese's restaurants owned by ShowBiz Pizza Time. The company, in Irving, Texas, has 305 restaurants, about 40% of them franchised, and is a favorite among the under-12 set. ShowBiz Pizza also owns 28 Monterey's Tex-Mex Cafes, where the cooking, not the critters, is the draw. In 1984, Chuck E. Cheese's went into bankruptcy shortly after founder Nolan Bushnell (who also started Atari) resigned. Business got better after current CEO Richard Frank joined ShowBiz Pizza in 1985. He began focusing less on teenagers and more on young children. Kids now romp through each restaurant's brightly lit game rooms and cavort with Chuck and his pals. The company plans to open 35 more restaurants in 1993 and 40 in 1994. That growth leads Montgomery Securities analyst Michael Mueller to expect 1993 net income to climb 22%, to $18.9 million, on a 20% rise in revenues, to $303 million. The stock traded recently at $29.50, or 22 times Mueller's earnings-per-share estimate for 1993. FAIR, ISAAC & CO. -- Ever wonder how your auto loan or credit application gets into the nay pile or the yea pile? Fair, Isaac in San Rafael, California, may have something to do with it. The company has added an analytical layer to the process of determining who is and who isn't creditworthy. At the core of its business are statistical models known as scorecards, data tables that rate an individual's income and credit history based on the payment habits of thousands of similar consumers. Clients such as Chemical Bank and Diners Club buy custom-made scorecards from Fair, Isaac to manage current accounts and assess the credit risk of new applicants. Kenneth Bohringer of Prudential Securities expects net income to rise 23% in 1993, to $4.8 million, on a 53% increase in revenues, to $65 million. The stock traded recently at $18, or 21 times Bohringer's estimate for 1993 earnings per share. Fair, Isaac has five overseas offices, including its newest one in Tokyo. CEO Larry Rosenberger is steering the company's analytical products toward new clients in the marketing and advertising businesses. |
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