For Woodland Hills-based Vertel Corp., a wireless telecommunications software developer, the last year on Wall Street has been a roller-coaster ride. The company’s stock went on a meteoric ride from around $1 a share in January to more than $50 by February. Since then, Vertel shares have plunged to around $5 a share. So what happened? Growing pains? “The way we characterize Vertel is that we’re a company in transition,” said chief executive officer Cyrus Irani. The five-year-old firm is watching its old business, which now accounts for most of the company’s revenue, fall out of favor with the market as it transitions to newer technologies to build new business. In essence, Irani says, the company’s stock is being penalized for that old business drop-off. “Telecommunication in general is seeing a major drop,” Irani said. “Second is, we believe we’re being dinged as a company for our old company, which is not the potential.” The company is a back-end telecommunication firm that makes software allowing various computer systems to communicate with each other. It started out with a focus on its TMN (telecommunications management network) software, which is based on the international standard for mediation software. The problem is that that software is losing favor, particularly in the U.S. market. TMN now accounts for 65 percent of Vertel’s revenues, but that figure is dropping sharply. TMN revenues declined 50 percent in the third quarter, compared to the like period a year ago. Vertel expects that area will continue to drop off. “It never took off the way we thought it would,” Irani said. “We expected it to decline, just not this fast.” For the third quarter ended Sept. 30, Vertel reported a net loss of $2.2 million (8 cents a share), compared with a loss of $3 million (12 cents a share) for the like period a year ago. Revenues were $3.4 million vs. $4.7 million. As the TMN market has slowed, Vertel has shifted its focus to newer mediation software technology. It introduced two new products over the last couple years, Legacy Systems and e-ORB, which are licensed by wireless companies as software that networks different computer systems. For example, it allows a service provider to network with a company server. The e-ORB software, developed last year, is a smaller and faster version of the Legacy system and can work on cell phones and Palm Pilots, unlike the Legacy, which must run on larger computer systems. E-ORB just hit the market this year. Wall Street greeted it with applause, boosting Vertel stock to $51 a share. “That’s what all the excitement has been around,” Irani said. “This market could be quite explosive.” Vertel expects that e-ORB, which now accounts for around 20 percent of the firm’s revenues, could overtake TMN revenues by next year. Sales of e-ORB have continued to pick up since it hit the market early this year, Irani said. In August, Vertel announced it had signed a deal with an undisclosed wireless and optical network equipment manufacturer to license its e-ORB technology. And in September, a second deal with a large undisclosed telecommunications company was announced. Financial terms were not disclosed for either deal. In October, Vertel announced a deal with Mannesmann VDO AG, which purchased e-ORB technology to develop a prototype in its vehicle telecommunications system. Irani expects more deals will be announced in the coming quarter and revenues will pick up in the coming year. But he cautioned that the company will not see explosive revenue growth right away. The business model works so that Vertel is paid license fees by other companies for each computer or cell phone or product bought that employs Vertel technology. “It’s not going to be short-term revenues,” Irani said. “In the near term, our revenues will be lumpy.” Rohit Shukla, president and CEO of the Los Angeles Regional Technology Alliance, said Vertel has a tough road ahead in a market that is becoming increasingly competitive. Shukla said Vertel has a good customer base, which it should be able to leverage to at least continue as a player in the market space if not a dominant company. He said Vertel has begun to focus on consulting companies, which could further expand its market beyond customers who use Vertel products. Vertel is also working on WebResolve, a service expected to launch next year that is geared to help Internet service providers and other telecommunications companies solve network problems, using its e-ORB technology. “The service providers we’ve talked to are very interested in it,” Irani said. “This could also take off.”