Amdocs Stock Plummets Amid T-Mobile Dispute and Grim Financial Outlook
Translated & summarized from Calcalist by baba
Amdocs' stock plummeted 44% after the company forecast a 14%-18% revenue drop for fiscal year 2027, citing a dispute with T-Mobile. The company is acquiring U.S. insurance firm EIS for $340 million to diversify and boost growth. CEO stated the company is taking a significant first step into a new vertical. Amdocs recently underwent a restructuring and laid off about 3,000 employees worldwide.
The story in 5 lines · by baba
- Amdocs stock fell 44% after forecasting a 14%-18% revenue drop for FY2027.
- A dispute with T-Mobile and reduced spending are cited as reasons for the revenue decline.
- Amdocs is acquiring U.S. insurance company EIS for $340 million to diversify.
- CEO called the EIS acquisition a key step in the company's new growth strategy.
- The company recently laid off approximately 3,000 employees globally.
Amdocs' stock experienced a significant drop of 44% in late trading on Wall Street following the software company's release of a bleak financial forecast for fiscal year 2027, projecting a revenue decline of 14%-18%. This outlook is largely attributed to an intense dispute with T-Mobile, a major U.S. telecom client of Amdocs for many years. "Our outlook for fiscal year 2027 reflects significant declines due to the dispute with T-Mobile, the completion of the US Cellular customer integration project, and reduced spending by T-Mobile. However, our other business activities remain strong and continue to show growth in fiscal year 2027," stated the CEO of Amdocs, CEO of Amdocs. According to Amdocs, both companies have issued notices to each other, with each side claiming the other has materially breached one or more agreements under which Amdocs supplies software and services to T-Mobile. Both Amdocs and T-Mobile have threatened to terminate their agreement or seek financial remedies. In a strategic move to diversify its operations, Amdocs is acquiring the U.S.-based insurance company EIS for $340 million in cash, aiming to revitalize growth after years of stagnation in the telecom market where it sells billing management solutions. Amdocs may increase the payment for EIS if certain targets are met. EIS, headquartered in San Francisco, provides policy, billing, and customer relationship management systems to numerous global insurance firms, including Aflac, CSAA, Allstate, Desjardins, and BNP Paribas Cardif. This acquisition provides Amdocs with an AI-based core platform, a global customer base, and expertise in both life and annuity insurance, as well as in general insurance. Amdocs plans to leverage EIS's technology and its own aOS agent-based operating system, adapted for the insurance sector, to enhance EIS's platform and integrate AI capabilities for insurance companies. "Expanding into a new vertical is a key part of our new growth strategy, and today we are taking an important first step," the CEO of Amdocs added. Amdocs previously attempted diversification, including the 2018 acquisition of digital content distributor Vubiquity for $224 million, which did not yield expected results. Amdocs' fiscal year, ending in September, reported revenues of $4.7 billion, a slight 3.5% increase, while earnings per share fell 7% to $4.68, partly due to a restructuring program that included the layoff of approximately 3,000 employees globally, about 10% of its workforce, with hundreds laid off in Israel.