Openwave falls 10 percent after analyst questions turnaround strategy, cuts to ‘underperform’

Openwave down 10 percent on analyst downgrade

NEW YORK — Shares of mobile technology software maker Openwave Systems Inc. fell more than 10 percent Monday after an analyst downgraded the shares on disappointing earnings results and an unclear turnaround plan.

Shares were down 27 cents, or 10.3 percent, at $2.36 in midday trade Monday.

Analyst Shyam Patil of Raymond James lowered the rating on Openwave to “underperform” from “market perform” and lowered his earnings estimate for fiscal 2010 to a penny-per-share loss, down from a penny gain seen previously.

Patil also noted the shares had run up 484 percent from their 2008 lows.

Aside from posting disappointing adjusted earnings on Thursday of break-even, versus analyst expectations for a profit of a penny per share, Openwave’s profit margins shrank and revenue benefited from a delay in services from the previous quarter.

Revenue is highly dependent on large deals with cell phone carriers for which visibility is limited, Patil said in a research note.

Fair value for the shares is close to cash value of $1.52 per share, Patil said.

“Openwave has been in a transition phase for the past few years trying to roll out next-gen products and applications, but has failed to achieve consistent license growth and profitability,” Patil said.

The analyst also said there was no apparent buyer for the company, “strategic or otherwise.”