Business Objects is a software powerhouse, with over 39,000 customers (including 80% of the Fortune 500). The company's software helps customers track, manage, and understand data.
Take one of its customers, UBS
As for ALG, it is a privately held software company that focuses on the enterprise performance management (EPM) market. Huh? Well, this basically means helping companies better manage things like staffing, payroll, and capital spending.
It's a big category and ALG specializes in the profit-management side of it. And, over the years, it has built a customer base of more than 400, including biggies like American Express
At the end of January, ALG had revenues of $19 million. Thus, the valuation is roughly 3 times revenues, which is a fair price for Business Objects to pay. Furthermore, Business Objects should be able to get lots of traction by distributing the ALG product line through its extensive customer channels.
What about Business Objects as an investment? While the company has a solid product offering, there are red flags. In the second quarter, revenues from software licenses fell 1% to $123.1 million. In other words, the growth for the company is coming from services, not software sales. Also, net income fell from $23.1 million to $7.9 million.
There has also been speculation that Oracle
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article.