Amdocs Ltd (Amdocs) reported weak 3Q 09 results with a y-o-y decline in revenues in line with Management guidance on account of the weak demand environment. For the near-to-medium term, on account of the ongoing economic slowdown resulting in tight corporate budgets and a delay in deal closings, revenue growth prospects are expected to remain weak, reflected in cautious Management guidance for 4Q 09. However, we expect service revenues to increase in the long run taking into account the company's initiative to sign several contracts, such as its agreement with Elisa to consolidate its billing system on Amdocs' platform. Moreover on account of cost control measures, operating performance is expected to continue to improve in the long run. Hence at current levels, we maintain a BUY on the NYSE common stock. We expect to revert to a 6-12 month horizon as we now anticipate a negative currency impact on the European stock. Hence we downgrade our rating for the European stock from a BUY to a HOLD.

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