It's been said that you can't become great in good times, because greatness lies in how you react to difficulties. Some companies run into trouble and lose steam. Others, like telecommunications software maker Openwave (Nasdaq: OPWV), take action and adapt to the new reality -- or at least, the company wants to look like it's doing that.
This spring, the SEC opened an informal inquiry into Openwave's options granting policies, making the company part of one of the biggest scandals since Enron. The policy review led to earnings restatements, which are still under way and keeping the company from filing proper 10-Q statements on time.
In response to these issues, Openwave has chosen to restructure itself and cut out a few layers of management between the CEO and the front-line trenches. The COO, chief administrative officer, chief marketing officer, and chief corporate strategy officer were all eliminated, their duties handed off to other executives, and nearly 5% of the company's workforce is expected to follow them out the door.
That was last week's news, though. This week, the company wants to make sure that we don't forget about its products and services, so it's sending out a veritable flood of press releases. Some of it is pretty cool stuff, such as an advertising function that lets billboards and bus stops send advertising directly to your cell phone as you walk by, or an option to send personalized ring tones and even videos to the people who call you. Other things are more utilitarian in nature, like a new development platform for Openwave software running on Qualcomm (Nasdaq: QCOM) hardware.
So, it looks as though Openwave is springing right back into action, although most of it is just words on paper at this point. The company appears to be looking for more customers, and some diversification there would help a lot: 42% of the latest reported quarter's revenues came from only three customers -- Motorola (NYSE: MOT), Sprint Nextel (NYSE: S), and Cingular (a joint venture between BellSouth (NYSE: BLS) and AT&T (NYSE: T)). That makes Openwave vulnerable in case one of these big clients decides to go with Trolltech or Microsoft (Nasdaq: MSFT) software for their next generation of cell phones.
Still, the company is under new management, and it's only fair to give the new team a chance to prove what it can do. I'd recommend keeping an eye on this stock for a few quarters before taking the plunge. That is, unless you're jonesing for a trial by fire of your own.
Further Foolishness:
The company does seem to follow through on earlier promises, at least.
Get both sides of the options story right here.
Openwave is a Motley Fool Rule Breakers pick, and Microsoft is a Motley Fool Inside Value selection. Try a 30-day free trial to one of our services to see the promise David Gardner found in Openwave.
Fool contributor
Anders Bylund
holds no position in any of the companies discussed here. You can check out Anders' holdingsif you like. Foolishdisclosure keeps us Fools out of trouble.
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