Comverse Technology Revises Outlook.

Business Editors

WOODBURY, N.Y.--(BUSINESS WIRE)--July 11, 2001

Comverse Technology, Inc. (NASDAQ: CMVT), today revised its outlook for the current and forthcoming quarters.

Comverse anticipates sales for its second quarter of fiscal 2001, ending July 31, 2001, will be approximately $345 million, and second quarter earnings per share to be approximately $0.28, excluding previously announced one-time charges of up to $9 million associated with the Company's recently completed workforce reduction, and up to $15 million for the write-down of investments.

Comverse estimates sales for the third and fourth quarters will be approximately $330 million and $340 million, respectively, yielding estimated fiscal 2001 sales of approximately $1.38 billion. The Company expects gross margins to be approximately 59% for the remainder of fiscal 2001, due in part to fixed costs spread over a lower than expected sales base. The Company estimates earnings per share for the third and fourth quarters will be approximately $0.20 and $0.23, respectively, for an estimated fiscal 2001 EPS, excluding one-time charges, of approximately $1.14. For fiscal 2002, the Company estimates 5% sequential quarterly sales growth, or approximately $1.53 billion, and earnings per share growth of 20%, to $1.37.

"Although most of our products support profitable, revenue-generating services, and are considered strategic competitive weapons for communication service providers, the capital spending recession and macro-economic slowdown appears to have spread throughout the developed world, and conditions have continued to deteriorate," said Kobi Alexander, Chairman and CEO of Comverse Technology. "Increasingly, customers have postponed discretionary purchases, such as the replacement of competitors' systems, and system and software upgrades. Furthermore, the delays in next-generation 2.5/3G wireless network launches have postponed the realization of several significant opportunities. In addition, more customers are buying 'just-in-time' and in smaller increments. And, our Infosys division, continues to feel the impact of lower enterprise spending. Finally, our results are being impacted by the combination of a strong Dollar and a weak Euro."

"At the same time, we are, for many reasons, optimistic about the long-term growth prospects for Comverse's markets and our competitive position within those markets," said Alexander. "Each of our three major operating units is now established as the market leader, and we continue to expand our market share in all three areas. We have very strong products and technology, have a customer base unparalleled in our industry, and have a solid balance sheet, which includes approximately $1.7 billion in cash, cash equivalents, and short-term investments."

In addition to the aforementioned estimates, for the current quarter, the Company expects significant reductions in orders backlog, higher DSO's (Days Sales Outstanding), and lower advance payments from customers, as a result of generally longer negotiated payment terms. Further details will be provided by the Company during its second quarter conference call, tentatively scheduled for August 28, 2001 at 5:00 P.M. Eastern Time. Conference call dial-in information will likely be made available the week of August 20th.

About Comverse Technology

Comverse Technology, Inc. is the world's leading provider of software and systems enabling network-based multimedia enhanced communications services with over 370 customers, in more than 100 countries. Comverse provides a wide range of solutions enabling multimedia messaging, multi-protocol mobile Internet platforms, wireless data and short messaging services, speech-controlled portal, wireless prepaid services, interactive voice response and other personal communications services.

Other Comverse Technology business units include: Comverse Infosys which provides multiple channel, multimedia digital recording, logging, and quality monitoring systems marketed to contact centers, enterprises, and law enforcement agencies; and Ulticom, a leading provider of service-enabling software for wireless, wireline, and Internet communications services. Comverse Technology is an S&P 500 and NASDAQ-100 Index company. For additional information, visit the Comverse Technology web site at http://www.cmvt.com.

Note: This release contains forward-looking statements that involve risks and uncertainties. There can be no assurances that forward-looking statements will be achieved, and actual results could differ materially from forecasts and estimates. Important factors that could cause actual results to differ materially include: changes in the demand for the company's products; changes in capital spending among the company's current and prospective customers; the risks associated with the sale of large, complex, high capacity systems and with new product introductions as well as the uncertainty of customer acceptance of these new or enhanced products from either the company or its competition; risks associated with rapidly changing technology and the ability of the company to introduce new products on a timely and cost-effective basis; risks associated with changes in the competitive or regulatory environment in which the company operates; risks associated with significant foreign operations and international sales, including fluctuations in foreign currency exchange rates and interest rates; the volatility of macroeconomic and industry conditions and the international marketplace; risks associated with the company's ability to retain existing personnel and recruit and retain qualified personnel; and other risks described in filings with the Securities and Exchange Commission. These risks and uncertainties, as well as others, are discussed in greater detail in the filings of the company with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its subsequent Quarterly Reports on Form 10-Q. The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.