BMC Bmc Software, Inc.

Leading software development, system and service management company BMC Software Inc. (BMC), recently won a contact from China UnionPay (CUP) to upgrade the latter’s operational efficiency and services. BMC intends to offer the required solutions by creating a centralized management system.  

Moreover, another employment and HR consulting and outsourcing firm, Manpower Group services has adopted some technical solutions from BMC in order to enhance the customer service efficiency of its Netherlands office. Using this new technology, the HR management firm expects to analyze the volume and nature of applications received by the company.

Further, this provides the company the ability to create reports based on categories and subcategories, as well as by departments. The new technology ensures that the company is aware of the current situation and undertakes proper measures to enhance its service levels.

This apart, at a recent Technology Media & Telecom Conference (TMT), BMC’s CEO Bob Beauchamp expressed his opinion about the company’s current and future state of affairs and sounds positive on the same. The company is one of the leading providers of IT solutions and serves customers across distributed, mainframe, virtual and cloud environments. The company offers its innovative solutions to organizations to reduce costs, curtail risks and drive business profit.

Earlier, BMC was chosen by Salesforce.com to deliver SaaS-enabled help desk solutions. The company also has additional SaaS offerings in its pipeline. As per a recent report by the technology research firm Gartner, the SaaS market will show consistent growth through 2013 and worldwide SaaS revenue is expected to total $16.0 billion for enterprise application markets. We believe this offers immense growth opportunity for BMC going forward, since the company is already well entrenched in this space.

On the other hand, BMC has initiated a share repurchase program and announced its plan to increase the amount stipulated for share repurchases going forward. The commencement of the share repurchase program increases our confidence regarding the company’s cash position, its cash flow outlook and no significant new cash required to fund its growth plans.

BMC Software Inc. reported decent fourth quarter results. The company also provided a positive outlook for fiscal 2012. Acquisitions have expanded BMC’s product portfolio, further facilitating a more comprehensive solutions offering. Growth prospects in most of its business segments, position in the government vertical and strong cash generation abilities are other positives.

However, we are a bit apprehensive about growing competition from big players such as International Business Machines Inc. (IBM), Hewlett-Packard Company (HPQ), EMC Corp. (EMC) and CA Inc. (CA), which bundle hardware and software offerings. The debt level also appears high. Hence, we reiterate our Neutral recommendation on BMC.

 
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