So far this year, shares of BMC Software
On Tuesday, the company reported its fiscal Q4 results. Revenues increased 2.8% to $419.4 million and net income rose 22% to $62.8 million, or $0.30 per share. Management has made lots of progress in streamlining its operations, and it looks like there will be further improvements on this front.
BMC has a large mainframe software business. While it's mature, it provides significant cash flows to fund new, higher growth businesses. Over the past few years, the main focus has been on BSM (business service management) software. This helps companies track information technology (IT) assets, minimize downtime, and enhance overall security. As a testament to the power of the technology, BMC snagged Accenture
To further improve its BSM offering, BCM purchased ProactiveNet on Tuesday. This privately held company develops sophisticated technology that allows for an "early warning system" for IT problems. It's something that saves companies lots of manual labor and should be a nice fit for BMC. ProactiveNet also has a nice list of customers that includes biggies like ADP
Trading at 3.1 times revenues, BMC has a reasonable valuation compared to other major enterprise software players. The company also expects to generate cash from operations of $475 million to $525 million for the full year. With $1.5 billion already in the bank, the firm has lots of firepower for stock buybacks, as well as acquisitions to build on its BSM franchise. This could mean that the stock may not tread water for long.