Morgan Keegan analyst downgrades NICE, says large customer to develop product internally

Ahead of the Bell: Analyst downgrades NICE

NEW YORK — A Morgan Keegan analyst downgraded shares of Israeli data recording products maker NICE Systems Ltd. on Wednesday, saying the company’s largest customer plans to develop its own software instead of relying on NICE’s.

Analyst Brian W. Ruttenbur downgraded NICE to “Market Perform” from “Outperform.”

“While we do not see this one single loss as having a significant impact, if other customers choose to internally develop software or if Avaya chooses to market their own analytics software it could become a much bigger negative to NICE.

Communication systems provider Avaya Inc. is privately held. Ruttenbur said the company represented about 13 percent of NICE’s overall revenue in 2008 and a little under 10 percent in 2009. He noted that while Avaya plans to develop its own business software, it plans to “continue to use NICE for call center recording purposes.”

Ruttenbur estimates that the business Avaya plans to develop internally represents about a quarter of its purchases from NICE.

A representative for NICE could not immediately be reached for comment Wednesday morning.

U.S.-traded shares of NICE inched down 11 cents to $33.25 in premarket trading.