Openwave flies on first profit, upgrades

Openwave (Nasdaq: OPWV) moved up 17 percent Tuesday after a hefty upside earnings surprise. Analysts cheered the results.

Shares in the company, which was created in November from the merger of Phone.com and Software.com, gained 9 to 62.25 early in Tuesday's session. The company is headed by Don Listwin, a former top executive at Cisco Systems.

The Redwood City, Calif.-based provider of Internet-based communication infrastructure software reported second-quarter operating earnings of $15.8 million, or 9 cents a share, excluding charges. The results blew by First Call analysts' consensus predictions of a loss of 3 cents a share. Revenue rose 36 percent sequentially to $109.7 million.

The company was also bullish with its outlook for 2001. Officials said that earnings for the year are expected to be 46 cents a share on revenues of $640 million, above Wall Street expectations.

Analysts across the board were quick to praise the company's performance. Here are a few highlights.

Mike Latimore at Raymond James upped his price target to $100 and reiterated a "strong buy" rating on the stock.

Rob Sanderson, an analyst at Banc of America Securities, hoisted his 2001 estimates to a 50 cents a share profit and $645 million in revenue from 15 cents a shares on $580 million in revenue.

US Bancorp Piper Jaffray analyst Edward Jackson raised estimates and reiterated a "strong buy" rating and $114 price target on the stock.

Frost Securites analyst George L. Chandler raised third quarter revenue and earnings estimates and bumped up revenue numbers for fiscal 2001. The analyst said he sees revenue percentage growth in the mid-teens for the next few quarters and praised the execution of the merger.

"We believe the company is seeing strong synergies, both from the revenue and expense side, from the Phone.com/Software.com merger, providing scalability and solid opportunities for selling into each other's customer base," the analyst wrote in his research note.

Matt Finick at Thomas Weisel adopted more of a wait-and-see approach. "We believe that Openwave's fundamentals continue to get stronger, but that the model is complex (two companies merged) and the revenue model is in transition," he noted. Finick said that the next big catalyst for the stock will be the company's analyst meeting Jan. 31.