Amdocs Will Acquire Qpass
Amdocs revealed that it will acquire digital commerce software and solutions provider Qpass for about $275 million in cash. Qpass' platform manages content applications and services across mobile, VoIP, and Wi-Fi networks, and helps customers determine how to offer, manage, charge, and fulfill content products and services. Qpass, which says that it serves more than 175 million mobile subscribers and more than 60 million Web portal, Wi-Fi, and VoIP users worldwide, has relationships with more than 300 content providers.
"Service providers are working hard to adapt their networks and business models to take advantage of the growing content and services market," Dov Baharav, CEO of Amdocs Management Limited, said in a written statement. "This transaction creates a unique combination that will help realize the transformation of service providers from carriers of voice and data services to dynamic retailers of ubiquitous, converged services and digital content."
The deal, projected to close in the quarter ending June 30--subject to regulatory conditions-is also expected to be 1 cent to 2 cents dilutive to earnings per share, excluding acquisition--related items in fiscal 2006, according to Amdocs. It is expected to become accretive to earnings per share excluding acquisition related items during fiscal 2007. Amdocs may incur a one-time charge in its third fiscal quarter to account for certain costs related to the acquisition.
The acquisition of Qpass is a good move for Amdocs, according to George Goodall, research analyst at Info-Tech Research Group. "With Qpass, Amdocs gets two things. The first is an attractive client roster. The second is the Qpass content delivery solution, which fills a rather obvious gap in the billing- and service-centric Amdocs portfolio," he says.
Tom Jowitt, telecoms analyst at Datamonitor, estimates that the annual revenue of privately held Qpass is significantly less than the acquisition price, but that is an indication that Amdocs sees the deal as strategic. The price tag is "quite a substantial amount of money to [put] up, but Qpass has got a blue chip client base. Amdocs feels that it's [a company] to take out and will add some value to its offerings," he says. Qpass' customer based includes Alltel, Cingular Wireless, Skype, Sprint, T-Mobile International, and Vodafone.
Daniel Hong, technology analyst at Datamonitor, contends that mobile devices and infrastructures have matured enough to the point where consumers are able to access better content and conduct more complex transactions via mobile devices. "Companies are beginning to more aggressively provide multiple touch points as well as make their offerings more comprehensive. Case in point, Salesforce.com recognized this with its acquisition of Sendia announced last week. The Amdocs acquisition of Qpass is also [notable as Amdocs] gains greater mobile capabilities."
It's been a busy season so far for Amdocs. Earlier this month the company announced that it acquired Stibo Graphic Software, a Denmark-headquartered provider of directory publishing solutions to the European market, for an undisclosed amount, and in March announced the availability of three new solutions for the financial services market.
The Qpass acquisition points to some interesting trends in the mobile market, Goodall adds, noting that good service and strong signal are no longer sufficient to maintain share. "Customers are now interested in diversity of experience," he says. "This trend has been underway in Japan and Europe for several years and quickly gaining traction in North America." It will be interesting to see how Amdocs and other CRM vendors try to leverage this paradigm in other industrial verticals, he says. "Look for increased convergence between CRM and content management solutions, and improved integration with third-party content providers."
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