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Open Text Potential Open-Ended

When it comes to corporate software solutions, Enterprise Resource Planning (ERP) companies Oracle (Nasdaq: ORCL  ) and PeopleSoft (Nasdaq: PSFT  ) , and Customer Relationship Management (CRM) companies Siebel Systems (Nasdaq: SEBL  ) and soon-to-be publicly traded, get all the attention. But collaboration tools and Content Management Systems (CMS) are increasingly important, though, much less talked about corporate software solutions.

Collaboration tools and CMS are used to manage, structure, and present information. Companies are finding value in presenting information to various audiences that, before the Internet, seldom got out of HQ for lack of a delivery system. And the ability to collaborate on projects is indispensable, given the increasingly globalized structure of many companies.

One such collaboration and CMS provider with an impressive customer list is Open Text (Nasdaq: OTEX  ) , whose fiscal 2004 third-quarter earnings disappointed investors today. The stock nose dived 8% due to a restructuring charge that was larger than expected. The Canadian company is currently occupied with integrating German email-archiving company IXOS Software AG, in which it recently purchased an 88% stake. Open Text did grow revenues by 82%, but it didn't break down how much of that increase came from IXOS' accretive revenues.

The results for the quarter were somewhat disappointing and certainly could have been more transparent. Going forward, the company expects revenue of $100 million to $110 million for the fourth-quarter ended June 30th, and $420 million to $450 million for the next fiscal year.

CMS solutions are not one of the first areas that corporations are going to start spending limited IT budgets on, but as spending does increase, this is an area that will experience significant growth and one that doesn't get a lot of attention from investors, yet.

Tom Gardner spends his time uncovering small, undervalued companies. Take a free trial toMotley Fool Hidden Gemsto learn more.

Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.

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10/24/2016 4:01 PM
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Open Text CAPS Rating: *****