Will This Hail Mary Work?

Once upon a time (circa 2006), Openwave Systems (NAS: OPWV) had it all:

But those good times didn't last long. About one year later, Openwave was back to losing money and missing estimates; the whole company was officially for sale, and the stock had fallen by more than 65% since those lofty 2006 highs. Apple (NAS: AAPL) had revealed but not yet released the very first iPhone, and Openwave's fancy mobile infotainment software lost its special shine. When everyone offers a Web browser, it's a bad market for carving out a boutique niche.

Fast-forward to 2011, and not much has changed for Openwave. The company just reported fourth-quarter results, including revenues some 19% below the year-ago quarter's and a book-to-bill ratio of 0.81. Anything over 1.0 means you have a steady order flow; 0.8 is pretty atrocious.

Openwave also reported a non-GAAP net loss of $0.10 per share in the fourth quarter, adding up to a $0.21 loss per share for the full year. We haven't seen a single positive GAAP bottom line since that seemingly auspicious outing in 2006, and Openwave has been burning cash year after year.

The company just announced a massive restructuring plan in order to refocus its business. "We are fundamentally resetting the business -- structurally and strategically," said CEO Ken Denman. The product portfolio is shrinking, R&D spending gets realigned to support profitable projects, and 18% to 20% of the payroll goes by the wayside.

"The market for our new products is developing more slowly than we had expected," Denman said, referring to upgraded messaging and mediation software. The company is essentially regrouping around its best products, which look similar to the stuff that made Research In Motion (NAS: RIMM) a mobile giant. Unfortunately, messaging is old news for a fading RIM now -- I don't see how Openwave could reheat that stale dish to fuel a serious turnaround.

No, this is another fading name in the mobile wars, doomed to evaporation unless a white knight comes along to buy the company. But Hewlett-Packard (NYS: HPQ) already did that for Palm, and all the other majors seem to have their software houses in order. This is a long shot.

Will Openwave pull off the Houdini escape of the millennium -- or is it a dead company walking? The best way to find out without risking any of your hard-earned investment dollars is to add the company to your watchlist. Get started now!

At the time thisarticle was published Fool contributorAnders Bylundholds no position in any of the companies discussed here. Rule Breakers got rid of Openwave four years ago. The Motley Fool owns shares of Apple and Research In Motion.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. You can check outAnders' holdings and a concise bio, follow him onTwitterorGoogle+, or peruseour Foolish disclosure policy.

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