With most experts concluding that growth is once again on the upswing, I've been on the lookout for stocks that have a chance to grab an outsized share of important, emerging markets. Informatica (Nasdaq: INFA ) is one.
On Monday, the data integration expert announced a $55 million deal for privately held Itemfield, which makes software that transforms unstructured data such as forms and email into information that can be read and processed by classic database systems.
That's no easy task. Relational databases from Oracle (Nasdaq: ORCL ) and IBM (NYSE: IBM ) use columns and rows to arrange information. Unstructured information isn't so easily organized; hence the name.
Informatica's managers think that's a huge problem. They may be right. I have some background in marketing in this field, and most experts I've spoken with say that as much as 80% of the business information that executives need to make informed decisions isn't contained in a classic database. That's a gaping hole that Informatica is betting businesses will want to close.
Makes sense to me. And to Oracle and IBM, both of which have introduced products that address unstructured information for their database systems. But neither, Informatica says, will allow customers to see all of their corporate data in a single view. Informatica says that Itemfield's software addresses that problem today.
If so, expect IBM, Oracle, and business intelligence vendors such as Business Objects (Nasdaq: BOBJ ) and Cognos (Nasdaq: COGN ) to be interested in the technology. End-to-end integration of all data sources can only make their offerings better.
But don't expect miracles, either. Itemfield is a very small business, expected to contribute just $10 million in revenue to Informatica during fiscal 2007. And the deal won't be accretive to earnings till next year's fourth quarter. As rebellious and important as this merger seems to be, it's still just a spark in terms of real growth. The wildfire, if it ever arrives, is likely to be a year or more away. Invest accordingly.
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Fool contributor Tim Beyers, ranked 2,481 out of 14,528 in Motley Fool CAPS, owns shares of Oracle. Get the skinny on everything else Tim is invested in by checking his Fool profile. The Motley Fool's disclosure policy is intelligence for your portfolio.