All Set to Dial Ulticom's Number?

Ulticom (ULCM ) has been hit by a double whammy: It is a software company that serves the telecom industry. And as everyone knows, techs and telecoms are both in the sewer. So it's no surprise Ulticom shares went down the drain--from 36 in early July to 5 in late September. They have since inched up to 6.96. Some pros think that things are now moving in the right direction for Ulticom, which makes signaling software for wireless, wireline, and Internet communications services. And there is talk that Comverse Technology, Ulticom's biggest customer and largest shareholder, with 76%, may bid for the rest of Ulticom's knocked-down stock. By doing so, Comverse could incorporate all of Ulticom's earnings, which had been growing through the recession. The possibility that Comverse will buy at a premium to Ulticom's current price enhances Ulticom's fundamentals. Analyst Paul Coster of J.P. Morgan Securities, who rates the stock a long-term buy, sees things "improving for Ulticom," in part because several major European phone carriers are getting ready to launch new customized services. Ulticom, he notes, whose top customers include Ericsson, will soon roll out enhanced services and applications on next-generation wireless networks. Ulticom is a play on the rising demand for new voice technology and growth of improved wireless services.

Although trading at 61 times estimated 2002 earnings of 11 cents a share, the stock is "a bargain," says Coster, selling at just 1.2 times cash on hand of $5.40 a share--and with no debt.

By Gene G. Marcial

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