In fiscal 2007, enterprise-software firm Compuware
On Tuesday, the company reported Q4 results. Revenue edged up 1.1% year over year, to $313 million, while earnings rose 20% to $67.5 million, or $0.21 per share.
Compuware's Covisint division is a key growth driver. Its software helps manage supply chains for major customers such as General Motors
Despite this encouraging performance, the bulk of Compuware's business remains stuck with slow growth. Its information technology (IT) consulting division faces intense competition, and its mainframe software division competes in a mature market.
To compensate, Compuware plans to focus on cost-cutting. It's assembled a group of top employees, the "Agents A-Team," with a minimum goal of $50 million in savings by the end of fiscal 2008.
For a company that already generates significant cash flow, this should be a nice boost. Compuware expects operating cash flows of more than $200 million for fiscal 2008.
What to do with the money? It seems the company will focus primarily on share buybacks, aiming to reduce its share count from 309 million to between 200 million and 220 million.
So far this year, Compuware's stock has spiked 27% to $10.67, a 52-week high. This may stem partly from its improved fundamentals, but it may also owe to buyout rumors. I think Compuware would be a nice fit for a player like IBM
I love it when further Foolishness comes together: