The last few years have been agony for shareholders of Intervoice (NASDAQ:INTV). The company develops communications technologies like voice messaging, text messaging, and even payment systems. But over the past two years, the stock price has lost more than half its value. With a current stock price of $6.25, it's not far from its 52-week low of $5.90. Does this make Intervoice a buy?
In Intervoice's first-quarter earnings, released Friday, revenues increased 5.6% to $45.7 million. But the company's bottom line plummeted because of higher selling, general, and administrative expenses, as well as higher research and development expenses. The net loss was $400,000, or $0.01 per share, compared to net income of $3.9 million, or $0.10 per share, in last year's second quarter. Still, the loss was less than the $0.03-per-share net loss analysts expected, according to Thomson Financial.
Intervoice's backlog for the quarter increased by 45% year over year, to $41.2 million. But a large portion of this contribution growth rested on just one recent contract with EchoStar Communications (NASDAQ:DISH).
Founded in 1983, Intervoice has amassed more than 23,000 deployments of its communications technologies. Thanks to Intervoice, traders using Citigroup's (NYSE:C) CitiPhone Brokerage Service have automated voice access to quotes and transactions; GE's (NYSE:GE) medical workers can use voice recognition to access needed information; and ABN Amro (NYSE:ABN) customers can access mortgage loan information over the phone.
Although the company's technologies have succeeded, a major transition has gripped Intervoice in the past year, as it makes key hires in the executive suite. The company's marketing failed to set itself apart; there were no major contract wins, and there were problems between product and R&D departments.
While it appears things are improving, Intervoice's revenue growth remains primarily driven by its recent acquisition of EDIFY, a maker of voice response systems. I expected the acquisition to help eliminate redundant costs and expenses, but the company has not been able to reduce its cost structure. Although investments in R&D are important for a company like Intervoice in a fierce competitive environment, a lower stock price makes it harder for Intervoice to pursue key acquisitions.
In addition to these challenges, Intervoice contends with some of the biggest names in technology, most of whom have many more resources at their disposal. Its rivals include such behemoths as Nortel (NYSE:NT), Avaya (NYSE:AV), IBM (NYSE:IBM), and Lucent (NYSE:LU).
Considering all of these hardships, it seems Intervoice shareholders' agony won't end soon.
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Fool contributor Tom Taulli does not own shares mentioned in this article.
