The stock price of software developer SkillSoft (NASDAQ:SKIL) has been fairly sleepy this year, moving within a stubborn range of $5.50 to $6.50. Even after a good quarterly report, the stock price was only able to muster a 3% gain, to $6.30. While the company is making progress, do not expect much change in the stock price in 2007.

In the third quarter, SkillSoft's revenues increased 6% to $57.1 million, which was higher than management's prior forecast of $54 million to $56 million. It does look like the company is getting traction from its investments in telesales and direct sales.

Moreover, it was able to maintain its high gross profit margins of 88%. This certainly helped the bottom line; net income was $7.1 million, or $0.07 per share, which was up from net income of $5.7 million, or $0.06 per share, in the same period a year ago. Again, the company beat its own estimate (earnings of $4 million to $5 million).

Essentially, SkillSoft offers a complete learning platform, including courseware, reference libraries, and learning management systems. Part of the content is fairly technical, such as database administration, Web design, and software programming. But there are also "soft skills" categories like project management and human resources.

However, the market contains a myriad of competitors, such as New Horizons Worldwide (NASDAQ:NEWH.PK) and Learning Tree (NASDAQ:LTRE). Furthermore, the corporate education market continues to be sluggish. After all, most companies do not see this software as a "must have" purchase.

So, to boost growth, SkillSoft is focusing on deal-making. And its latest deal is definitely significant: the $285 million acquisition of NETg, which is a division of TheThomson Corporation (NYSE:TOC).

To finance the deal, SkillSoft will need to borrow roughly $180 million. Actually, it's a good time to borrow money, given the low interest rates and willingness of lenders to take risks (such as has been the case with the rise in corporate buyouts).

In the deal, SkillSoft will pick up some new technologies, such as live instruction, as well as a content library and Global 2000 clients. Furthermore, NETg generated 2005 revenues of $160 million, which puts the value of the transaction at about 2.3 times revenues (this is based on SkillSoft's estimate that there will be a fall-off in combined revenues). Based on this metric, it looks like a fair price for SkillSoft, as the typical software deal is valued at about 2 times revenues.

The good news is that management believes that the deal will be "significantly accretive" to earnings (primarily because of cost synergies). The bad news? Well, do not expect this result until fiscal year 2009.

Yes, shareholders must wait again. Thus, in the meantime, investors are probably going to continue to be lukewarm regarding the stock.

For further Foolishness:

Striving for savings? Fond of funds? Whatever your investing style, the Fool has a newsletter for you. You can take any of them for a 30-day free spin.

Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 260 out of 14,235 in CAPS. The Fool's disclosure policy types in excess of 70 words per minute.