Amdocs (NYSE:DOX), a software developer for the telecom industry, has done something that's been fairly tough for companies in its sector to do in 2006 -- generate a positive return. That's in part because there's been a need for the software that Amdocs delivers as the telecom undergoes some wrenching changes and gets up to speed with new products such as VoIP and digital content on wireless devices.
As Amdocs' second-quarter earnings report showed on Thursday, revenues increased 23% to a company record $626 million. Net income was $85.6 million, or $0.39 per diluted share, compared with net income of $77.1 million, or $0.36 per share, in the same period a year ago. Excluding charges for mergers and acquisitions and stock-options expenses, net income would have been $106.2 million, or $0.49 per share. According to Thomson First Call, Wall Street analysts expected earnings of $0.46 per share and revenues of $623.5 million.
As telecom companies add more services, it is important that they can offer a seamless customer experience, and that's where Amdocs comes in. It provides software and services primarily to telecom and broadband industries, and its offerings include customer relationship management (CRM) software, order management, service fulfillment, and mediation of disputes. It then helps to integrate these offerings across various lines of business, such as wireless, wireline, cable, satellite, and VoIP.
A key advantage for Amdocs is that it has deep experience dealing with massive organizations. With customers including Sprint Nextel (NYSE:S), AT&T (NYSE:T), BT (NYSE:BT), Cingular Wireless, Comcast (NASDAQ:CMCSA), and Verizon (NYSE:VZ), Amdocs has proved that it can scale its solutions for companies with millions of subscribers.
The company is continuing to broaden its product offerings. For example, it recently purchased Qpass -- a leader in managing digital content, such as on wireless devices -- for $275 million. Digital-content management is definitely a growth driver for the telecom industry, which wants to profit from downloads of music, video, and games.
Expect Amdocs' growth momentum to continue. For the next quarter, management forecasts revenues of $657 million and earnings per share of $0.49. For the full year, revenues are expected to range from $2.88 billion to $2.98 billion and earnings per share to range from $2.06 to $2.16.
With a broad product offering -- and deep experience -- Amdocs is at the top of the list for telecom companies seeking customer software solutions. And as these companies invest heavily in new products, that means more and more business for Amdocs. That's a good recipe for a healthy stock, whether in bull or bear markets.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.
