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Openwave Systems Inc. (NASDAQ:OPQV) is one of the companies reporting earnings after the close today, and this will be the year-end for 2007 as well.  Unfortunately the company has buried many shareholders more than once, and if it was France in the late 1700’s there would be a second or third shareholder revolt.  It leveraged and tried to force a buyout, and that failed to run the shares.  It also left the company alone, or at least "still’ and ‘for now.’  The company probably wasn’t run so poorly before the blow-up occurred, but as we’ve said many times this company is one of the myriad of service providers that found itself in a consolidating internet, cellular, and wireless communications providers world.  When there are much fewer and very big clients out there, it means companies will see "Good hits, and bad misses."  The bad misses hurt, a lot.

Estimates today are -$0.14 EPS & $71.21 million in revenues, and the next quarter estimates are -$0.06 EPS & $72.5 million in revenues.  It is unfortunately still expected to post a loss for fiscal-June 2008.  Shares are down basically 50% from the yearly highs, and barely above the lows from ist $5.07 to $10.58 trading range over the last year.  It is hard to find too many people who want to talk about the old $20+ highs from early 2006.

If you trust options in a sub-$10.00 stock it looks like options trades are not expecting more than a 4% or 5% move in either direction.  But that is hard to guage on a lower priced stock as each penny is substantial in real money terms.  The chart is unfortunately broken as the fundamentals have deteriorated and most of the analysts have outright abandoned teh stock.

A larger company could integrate this company for an instant-in with mobile phone and other wireless communications providers. It also has some substantial platforms and proprietary technology.  The flip side is that in the consolidated world of fewer providers is that it boils down to what someone would pay for it.  The current market cap is $440 million, and right now it’s just not known if the value is really that much higher or that much lower.

Jon C. Ogg
August 2, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.