NEW YORK—Investment banking firm Raymond James & Associates Inc. reduced its estimates for Syniverse Holdings Inc.’s earnings based on acquisition costs and concerns that “the company’s number portability contracts may be re-priced at lower rates as they come up for renewal at the end of this year and into next year,” according to an analyst note by Ric Prentiss.
Raymond James cut its expectations for Syniverse’s 2007 earnings by about $6 million, based on a worst-case scenario of the price of LNP contracts being reduced by 20 percent.
However, Prentiss noted, “Porting a number is a sensitive process as it directly affects the customer’s initial experience with the carrier. This sensitivity should give Syniverse negotiating leverage during the contract renewals, in our opinion.”
Raymond James also reduced its estimates on Syniverse’s 2006 cash earnings per share from 94 cents to 89 cents, due to increased general and administrative costs and an increase in debt related to the company’s recent $45 million acquisition of Hong Kong-based Interactive Technologies Holdings Ltd. ITHL provides services to mostly GSM operators in Asia Pacific countries and is expected to expand Syniverse’s footprint in that region.
Syniverse’s stock was up slightly after the news to about $13.20 per share.
