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We are building up this software-solutions position after it announced results that matched expectations.
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Openwave Systems (OPWV) announced fiscal fourth-quarter (ended June) results over night that met expectations. At $1.83, the stock is trading about 8% lower this morning, and we will buy 250 shares after you receive this Alert. This purchase gives us a total of 2,500 shares of Openwave and it makes up 3.9% of the model portfolio.

The company posted breakeven results, which matched the consensus analyst estimate. Revenue fell 9% year over year to $43.6 million, but came in ahead of expectations. Openwave saw good demand for its new Media Optimizer and other new wireless network products. Management is confident that it can grow market share in fiscal 2011 (ended June).

On the other hand, orders were down 27% year over year to $35.8 million, due to a decline in demand for the company's legacy products, especially from top customers Sprint Nextel (S) and AT&T (T) . The company has about 20 potential customers testing its new Media Optimizer product, and we believe new orders for this product will help pick up the slack in the coming quarters.

In the meantime, Openwave ended the quarter with $119 million ($1.40 a share) of cash and investments on the balance sheet. Add to this the fact that management is keeping a tight lid on costs and not burning through cash, and we believe that the stock can rebound toward $2.50 over the next few months.

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