Kobi Alexander

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Jacob "Kobi" Alexander is the founder and the former CEO of New York-based Comverse Technology. In 2006, he was charged with multiple counts of fraud and related offenses pertaining to irregularities in trading of Comverse stock; he subsequently fled to Namibia.

Alexander founded Comverse Technology (NASDAQ: CMVT) in 1982 and built it up from a 3-person Israeli startup to employing over 5,000, becoming the leading provider of software and systems for telecommunication companies worldwide. Comverse’s success led to its inclusion in the NASDAQ 100 and S&P 500 indices.

1 Early life
2 Career
3 Awards & Accomplishments
4 Criminal charges
5 References
6 External links

[edit] Early life

Alexander (born May 4, 1952) into a middle class family in Kfar-Saba, Israel. His mother was a school teacher, and his father an officer in the signal corps of the Israeli Defense Forces, and later, the Managing Director of the Israeli National Oil Company.

Following military service, Alexander enrolled in the Hebrew University of Jerusalem, receiving a BA in Economics Magna Cum Laude in 1977. In 1978 he traveled to the United States earning an MBA at New York University.

In his early years in New York, He met an electrical engineer and together with his brother in law, a professor of Computer Science at Columbia University, the three conceived voice mail technology and developed the idea of what was to become Comverse Technology. The founders understood already then that communications will be a big market, and pioneered the voice mail systems that today are used by telecoms worldwide to support telephony services for the masses.

[edit] Career

In 1981, fresh with his NYU MBA, Alexander returned to Israel to bootstrap Comverse. Today, Israel is well-known for its High Tech Industry. But at the time, there was very little High Tech industry in Israel, with most of the companies in the space primarily focused on the defense industry. Alexander and Comverse were among the first to turn that around.

For years, the founders struggled, working from a two bedroom rental apartment which also served as Alexander’s residence in a Tel Aviv suburb. Raising financing was close to impossible. In the early eighties the Israeli Venture Capital community had not yet developed, and Israel was viewed by Wall Street as farther than the moon. The endeavor was made harder by the fact that none of the partners had any money or any prior record in business. Thus, all the financial institutions and the high tech companies in Israel and abroad that were approached for financing, refused to finance the fledgling company. Everyone thought the ambitions of the tiny startup out of a tiny country to one day become a world leader in enhanced services, were crazy.

Not only was it hard to raise financing, but it was also extremely difficult to recruit talent. Luring away employees from established companies where they had good salaries, good benefits, and good pension plans, to join an unknown company with no record and no money, was highly challenging.

Also, since Israel is a small country that had virtually no domestic market in technology, sales and distribution would become a major challenge. In order to succeed, the fledgling company would have to export its products to world markets, and thus compete with the world’s established technology giants, as well as with the well-financed Silicon Valley technology companies that challenged them.

In 1986, after struggling for over 4 years with the company reaching the brink of bankruptcy, the two other founders left their operational roles, and subsequently left the company. Alexander was left alone to try to put together the broken pieces and rebuild the company. And rebuild he did.

Upon taking the helm, Alexander made three key strategic decisions which made Comverse the success it is today:
1. Selling strictly to telecoms, who in turn represented hundreds of thousands of end user licenses for Comverse systems, and who enabled Comverse to piggyback on their growth.
2. Focusing on markets outside the U.S. where competition was weaker, enabling Comverse to establish leadership in certain regions early on, and build up from there.
3. Raising financing when the market conditions were favorable, rather than when the company was in desperate need for it. Thus, financing was always available for key growth initiatives.

Within a short amount of time, Comverse was back on its feet, and charging ahead full steam. A major breakthrough came when Alexander convinced Swiss telecom giant Ascom to invest US$6 million in the company in the mid eighties, providing Comverse the capital it needed to realize its dream. In 1986, Alexander was able to take Comverse public on the NASDAQ.

In 1997, Comverse bought its main competitor for US$700 million, at the time the largest acquisition to date for an Israeli based company. This acquisition was viewed as a daring, but brilliant act by Wall Street, and it cemented Comverse’s position as the undisputed world leader in enhanced services for telecoms. Today, Comverse is the global leader in voice mail, and among the leaders in SMS, prepaid cellular and ring-back tones. In addition, Comverse Technology, Inc., which owns 100% of Comverse, also owns majority equity in several other companies, including Verint and Ulticom. It has over US$1.5 billion in sales to over 450 telecoms in 120 countries supporting more than 450 million subscribers worldwide. As of March 2006, the company employed approximately 6000 people in over 50 countries, had a market capitalization of approximately US$6 billion, and over US$2.2 billion in cash, the largest amount of cash for a company its size.

[edit] Awards & Accomplishments

For his achievements over the last 25 years, Alexander received the global business community’s highest awards and accolades. He came 12th in Chief Executive Magazine’s: “Market Value Added Ranking” of the CEOs of the 1000 largest US corporations, ranking those that “created the most wealth for shareholders”. The successes of Kobi and Comverse were recognized by the world’s leading publications including Barron’s, Bloomberg, Business Week, Financial World, Forbes, Fortune, International Business, and Wall Street Journal. Kobi was awarded “Entrepreneur of the Year” by both Ernst & Young and Deloitte & Touche.

The Wall Street Transcript, naming Kobi Alexander as the Gold Award Winner in the Computer Telephony industry said: “… an exceptional management team have yielded consistently outstanding revenues, earnings, and shareholder value. Alexander has set some very high standards for this company and this industry.”

In addition to Comverse Technology, Alexander spun off and took public several other companies including Ulticom (NASDAQ: ULCM) and Verint Systems (NASDAQ: VRNT). Companies under his leadership were listed in Barron’s 500, Business Week: “Hot Growth Companies”, “Business Week 50”, Business Week: “The Information Technology 100”, Financial World: “America’s Best 100 Growth Companies”, Fortune: “100 Fastest Growing Companies”'^[1], International Business: “100 Fastest-Growing International Companies”, Wall Street Journal: “10-Year Best Performers”, and Wall Street Journal “Honor Roll”, among others. In 2006, Comverse was named one of Institutional Investor: America's Most Shareholder-Friendly Companies". "As CEO of Comverse, Alexander was sought out by the likes of former Chinese President Jiang Zemin, who slipped away from official meetings in 2000 and steered his motorcade through a pot-holed section of Tel Aviv to meet with him."[1] He served as the Chairman of the Board and Chief Executive Officer ("CEO") of CTI from 1987 to May 1, 2006, when he resigned during an investigation being conducted by a Special Committee of CTI's Board of Directors into the timing of CTI's stock option grants. He was Chairman of several CTI subsidiaries, including Verint and Ulticom.

[edit] Criminal charges

On July 31, 2006, Alexander, who holds Israeli citizenship, was charged by United States Department of Justice authorities with multiple charges of conspiracy to commit various types of fraud (including securities fraud, wire fraud and mail fraud), as well as with related offences, all relating to the timing of Comverse's stock option grants. Adjudicating stock option backdating cases will be subject to a broad array of legal and ethical opinions held among academic, business and legal scholars as to whether or not regulations have been violated or shareholders equity affected. According to an academic study by Randall A. Heron and Erik Lie, options backdating has been widespread among U.S. companies. Their analysis is that more than 29% of firms manipulated grants to top executives at some point between 1996 and 2005.^[2] ^[3] Having left the United States on June 21 2006 on a pre-planned annual vacation in Israel^[4], Alexander's lawyers arranged with American authorities that he would return to face indictment on July 30, 2006; however, he instead traveled to Germany. On July 31st he was added to the FBI's Most Wanted List^[5].

On August 9, 2006 the United States Securities and Exchange Commission filed a civil injunctive action in the United States District Court for the Eastern District of New York against Alexander^[6], along with alleged co-conspirators William F. Sorin, Comverse’s former Senior General Counsel, and David Kreinberg, Comverse’s former Chief Financial Officer. The complaint makes nine claims of violation of the Securities Act and the Exchange Act, including fraud (First and Second Claims), and falsification of books, records or accounts (Fourth Claim).^[7] Through this action, the Commission is seeking permanent injunctive relief, disgorgement of ill-gotten gains, civil damages, and a prohibition against any of the defendants becoming officers of a securities-issuing entity under SEC jurisdiction.^[8]

Alexander transferred over 40 million dollars from his personal U.S. bank account to his personal bank account in Israel. He was arrested by Interpol in Windhoek, Namibia on September 27, 2006. He was released on bail on October 3, 2006.^[9]^[10]^[11]^[12]. According to a Reuters report of April 23, 2007, the Namibian government described Alexander as “very passionate" about the country and its people; Alexander has promised to boost academic interest in science and technology in Namibia by establishing an annual scholarship for primary and secondary level students.[2] He has also begun to introduce advanced technology to the country with his development of a low budget solar powered housing project for 100 low-income Namibian families.[3]

Despite fighting extradition to the United States, Alexander announced on January 28, 2008 that he has filed suit against Comverse. Alexander claims the firm owes him $72 million in severance, unexercised stock options, and bonus pay. .^[13]

According to a report published in The International Herald Tribune of February 25th 2008 a hearing preliminary to an extradition review by the courts has been scheduled for June 16, 2008.[4] The final outcome of the extradition proceedings can be several years away pending the appeals process[5]. Despite impending extradition proceedings, Alexander has invested heavily within the country. ^[14]