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(photo credit: Courtesy Photo)
Comverse Technology chief executive officer and chairman Koby Alexander resigned on Monday as part of a major management shake-up at one of Israel's premier technology companies.
Analysts, however, were confident the loss of the company's founder would not have a major effect on its operations.
"Alexander started the company and along with other management members took it to where it is today, so it's unfortunate that he had to step down in such circumstances," said Daniel Meron, research analyst at RBC Capital Markets, who does not own any shares in Comverse. "It's obviously not a good development but I don't necessarily see an impact on the day-to-day operations of the company."
Meron note that Alexander's resignation did not come as a complete surprise after the company said in mid-April that it would restate earnings due to the findings of a committee of outside directors that dates of stock-option grants may have been inaccurate. The US Securities and Exchange Commission has been focusing on whether some companies have been backdating the price at which executives can cash in stock options, allowing the executives to boost their returns.
Comverse said Monday that Ron Hiram has replaced Alexander as chairman, while fellow board member Raz Alon was appointed interim chief executive officer. David Kreinberg, chief financial officer, also resigned and was replaced by Avi Aronovitz, who has been vice president of finance and treasurer, the company said.
Alexander and Kreinberg also resigned from the boards of Comverse subsidiaries Verint Systems Inc. and Ulticom.
In reaction to the news, Comverse shares were up 5 percent at $23.81 in midday trade in New York. The stock has fallen 22 percent since March 14 when the company first made known that the committee was reviewing the accuracy of the stated dates of option grants.
RBC's Meron, who has a target price of $28 on the stock, maintained his outlook of 'sector perform', having increased the risk qualifier to 'speculative' from 'above average risk' before the option issue arose.
"Most investors were factoring in some level of possible fall outs including this management change, the restatement, the delays in financial filings, a possible delisting, etc.," Meron said. "It's always difficult to call a bottom limit, but I believe the fundamentals of the business continue to be okay and that the shares may look more attractive in the long-term."
Founded in 1984, Comverse Technology, Inc. grew into one the world's largest makers of voicemail software, and was one of the first Israeli companies to go public on the Nasdaq in 1986. Alexander has served as chairman of the board of directors since September 1986 and as CEO since April 1987.
He and Kreinberg will become advisers and "cooperate with the special committee of the board of directors in its previously announced review relating to the company's stock option grants and help ensure a smooth transition for the company's senior management," the company said in a statement.