Please ensure Javascript is enabled for purposes of website accessibility

Blackboard Chalks Up a Deal

By Tom Taulli – Updated Nov 16, 2016 at 12:22PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The leader in educational software continues its growth trend through an integration agreement with Microsoft.

I've taught online courses for the past five years or so, and in that time I've used a variety of educational software systems. By far, the best one I've used is from Blackboard (NASDAQ:BBBB), a Motley Fool Hidden Gems recommendation. In fact, I'm currently teaching a course at UCLA using the system.

But that's not what we're here for today. We're here to talk about the good news that investors just received from the company -- a nearly 15% surge in the stock price on news that Blackboard has entered a deal with Microsoft (NASDAQ:MSFT) in which Blackboard will better integrate with Microsoft's SharePoint Portal server, as well as with Office.

I don't use SharePoint, but I do use Office. (Who doesn't?) And I can certainly say that making Blackboard and Microsoft function together as seamlessly as possible can do nothing but help those who use both platforms. Schools like Blackboard's level of functionality, and this move serves to increase it.

According to Blackboard, that's just what its customers wanted. And history shows that Blackboard does listen to its customers. It even gives awards to its customers for developing innovative programs.

Getting recognition from a company like Microsoft is a something of a coup for Blackboard. And by collaborating more, Blackboard is likely to benefit from Microsoft's sales efforts. After all, even though Blackboard is a leader in its industry, it's still a small company, and being able to leverage the huge direct sales force of Microsoft should mean a boost for its business. It also looks as though both companies will engage in joint marketing efforts, and that is bound to help, too.

Blackboard has been busy lately. It recently plunked down $180 million to acquire a competitor, WebCT, in a move that gives the industry leader 810 new higher-education customers. And because WebCT has only one product offering while Blackboard has five, Blackboard has an opportunity to sell into the new customer base.

There's much more room for growth beyond the WebCT deal, too. The U.S. is home to roughly 6,400 higher-education institutions, and so far, Blackboard has 1,200 of those customers. (And most of them currently use only one or two products). Moreover, there are 11,000 international educational institutions, of which Blackboard has 500.

"There is a tremendous opportunity for growth," says Michael J. Stanton, senior director of Investor Relations at Blackboard. "We grow our business by adding brand-new client relationships, and we grow our business by growing our existing client relationships as they continue to license two, three, four, and five products."

That's a strategy that makes a lot of sense. No wonder companies like Microsoft are talking to Blackboard.

The Motley Fool has kicked off its ninth annual Foolanthropy campaign! Nominate your favorite charities on our Foolanthropy discussion board through Nov. 1. For guidelines on what makes a charity Foolish, visit www.foolanthropy.com .

Fool contributor Tom Taulli does not own shares of companies mentioned in this article.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$237.92 (-1.27%) $-3.06
Blackboard Inc. Stock Quote
Blackboard Inc.
BBBB.DL

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.