Thursday, August 18, 2011

Bridgewater is Now "A Division of Amdocs", but Revenues Decline

Amdocs completed the acquisition of Bridgewater Systems (see "Amdocs Completes Acquisition of Bridgewater Systems, Enabling Service Providers to Redefine the Data Experience" - here).

BWS web site already reflects that - Bridgewater is now "A Division of Amdocs" (here).

Earlier this week BWS published its Q2 results, showing a significant decline in revenues (see "Bridgewater Systems Reports Q2 2011 Financial Results" - here).

"Total revenue for Q2 2011 was $14.6 million, compared with $22.7 million for Q2 2010. Product revenue for Q2 2011 was $9.3 million, or 63% of total revenue, compared to $17.1 million, or 75% of total revenue, for Q2 2010. The year-over-year decrease mainly reflects two expected and previously disclosed changes: the transition in the Company's business model with its largest customer [see - "Bridgewater Growth - It is all about Verizon"- here] and the expiration of the Alcatel-Lucent Source Code License Agreement in Q4 2010 [see "Bridgewater - Will the Juniper Agreement Replace Alcatel-Lucent Revenues?" - here].

On March, the company provided full-year guidance for 2011 (here), expecting revenues of $88.0 to $100.0M. On May, it was reduced to $77.0 to $87.0M (here). The actual revenues for the first half are $33.7M.

With these results, the price Amdocs is paying for BWS is still (although less then it was during the announcement) attractive compared to the 2010 Tekelec-Camiant deal (see "Camiant Information Exposed (and Compared to Bridgewater" - here).

Amdocs is paying $139M (net of Bridgewater's cash as of June 30, 2011). With estimated ~$70M revenues for 2011, this is a price/sales ratio of ~2, compared to 4.6-5 that Camiant got on its 2010 revenues.

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