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Openwave keeps pace

The Web browser maker, considered one of the wireless industry's bellwether stocks, reports record third-quarter revenue that meets Wall Street's expectations.

Wireless Web browser maker Openwave Systems, considered one of the wireless industry's bellwether stocks, reported record third-quarter revenues Wednesday that met Wall Street's expectations.

The maker of an Internet browser for phones said its revenues increased by 19 percent in the third quarter, rising to $130 million from the second-quarter total of $109.7 million.

Earnings were $16.3 million, or nine cents per share, the company reported. A survey of 24 brokers by First Call were forecasting earnings of nine cents a share.

Including charges related to acquisitions, the company actually reported a loss of about $151.2 million, or 91 cents per share.

Analysts regard Openwave as a bellwether for the wireless Web market because of the company's way of earning a large portion of its cash. The company has given its browser away for free to telephone service providers. Telecommunications carriers, offering wireless Web services, then pay Openwave a commission every time someone accesses the wireless Web.

If Openwave is doing well, then the number of people using the wireless Web is healthy, and the ripple effects onto companies selling e-mail services or other applications will flow, analysts say.

"The wireless Internet continues to come of age," Listwin said. "Telephone service providers are serious about the mobile Internet."

Good news has been scarce lately in the telecommunications industry. Two of the top three handset makers have issued thousands of pink slips as the number of handset sales have declined.

Even so, Openwave isn't the only company to be reporting relatively positive news of late. Sprint PCS reported that its revenues for the first quarter included a 68 percent jump in revenue in its wireless business, and it added nearly 900,000 customers.

Listwin said the number of mobile service subscribers using an Openwave browser increased from 5.3 million in the third quarter. There are now about 17.4 million subscribers who use Openwave's browser or other products.

He said growth was particularly strong in Japan and the Asian Pacific region. The Asian region accounted for about a third of the company's revenues in the third quarter. In the second quarter, business in that geographical area accounted for about a quarter of the company's revenues.

Just in the past two weeks, Openwave signed two deals with Asian telephone service providers. Chinese Internet service provider Shanghai Online will be offering its customers an e-mail service provided by Openwave. Taiwanese telecommunications service provider KG Telecommunications will be using Openwave's software as well.

Listwin is also holding firm on Openwave's earnings forecast for the rest of the year, despite the overall gloom that has settled on the telecommunications industry.

He expects revenues to grow each quarter by between 10 and 20 percent. Openwave's 2001 fiscal year should end with revenues of about $640 million, or 46 cents earnings per share. That is in line with what the company forecasted at the beginning of the year.

"The fundamental trends are still generally robust," Listwin said. "Spending on wireless technologies has been increasing steadily over the last eight quarters."

Openwave isn't immune to the telephone handset sales slowdown, Listwin said. However, Openwave's business isn't based just in North America, where the telecommunications industry has been hit hard in the past 12 months.

Openwave saw "solid growth" in Asia and Europe, which account for more than half its revenues, Listwin said.