BMC, EMC, Microsoft and VMware
On the buyout front, BMC Software Inc. is acquiring privately-held Tideway Systems Ltd., a discovery solutions provider. On the earnings new side, EMC Corp. and VMware Inc. reported mixed third quarter results while Microsoft Corp. reported results that exceeded lowered expectations.
Focal Points:
- BMC announced it entered into a definitive agreement to acquire UK-based Tideway Systems, a provider of IT discovery solutions, for approximately $30 million. The acquisition enhances BMC's Business Service Management (BSM) platform, supports the set of discovery requirements for BSM, and features deep integration with BMC's Atrium Configuration Management Database (CMDB) based on Tideway's long-time membership in BMC's Technology Alliance Partner program. The transaction is expected to close within a week.
- EMC reported its third quarter fiscal 2009 results. Net revenues for the quarter were $3.5 billion, down five percent from the previous year's quarter. On a GAAP basis, net income for the quarter fell to $298 million, a drop of 24 percent from $393 million in the year-ago period. On a quarter over quarter basis, EMC saw revenues rise eight percent while net income soared by 45 percent. Meanwhile, VMware, which is majority-owned by EMC, reported revenues of $490 million, up four percent from third quarter of 2008. GAAP net income for the third quarter was $38 million, a decrease of 54 percent from the third quarter of 2008 when it earned $83 million.
- Microsoft announced its first quarter 2010 results. Net revenues for the quarter were $12.9 billion, down 14.2 percent from $15.1 billion in the year-ago quarter. Earnings on a GAAP basis were $3.6 billion, a drop of 18.3 percent from the $4.4 billion in the previous year's quarter. Each of Microsoft's business segments reported lower revenues, although a couple of the unit declines were negligible. The worst hit was Microsoft's Business Division, which includes Microsoft Office system and Microsoft Dynamics business solutions, where revenues fell 10.4 percent.
Experton Group believes the IT sector quarterly results and outlooks for the next two quarters reveal executives concerns about the economic climate, suggesting a very slow recovery globally. Microsoft's new Windows 7 release, which came out on October 22nd, may drive new PC and software sales but its impact will be limited, as enterprises spread their acquisitions across multiple years. Nonetheless, it will exceed Vista's impact, which was virtually non-existent in the corporate space. BMC's acquisition helps it keep pace with its primary system management competitors – CA Inc., Hewlett-Packard Co., and IBM Corp. – which have all inked deals to round out their systems management capabilities. IT executives should be developing conservative 2010 budgets that assume constrained capital and operational expenditures and working with peers and staff to find ways to improve processes and/or reduce project investments.