BMC Software Inc.
) reported fourth-quarter 2013 earnings per share of 72 cents,
missing the Zacks Consensus Estimate of 74 cents.
Total revenue in the reported quarter was $568.6 million, up
0.7% from $564.7 million in the year-ago quarter. The upside in
revenues can be attributed to a meaningful increase in
Maintenance revenues that was almost totally offset by the
decline in License and professional services revenues.
Moreover, BMC witnessed a meaningful increase in the SaaS
business, and witnessed an increase in its customer base by about
80.0% during fiscal year 2013. The company, at present, boasts
more than 600 active SaaS customers. This apart, in fiscal 2013,
the company witnessed a decent increase in its cloud-related
license bookings, which increased double-digits on a
year-over-year basis to $100 million.
License revenues in the third quarter were $225.4 million,
down 3.5% from the year-ago quarter. Maintenance revenues were
$286.1 million, up 4.8% from the year-ago period. Professional
Service revenues were $57.1 million, down 1.7% from the year-ago
The GAAP operating income was $105.8 million in the quarter,
down 0.2% from $106.0 million in the year-ago quarter. Excluding
special items like severance costs and amortization of intangible
assets but including stock-based compensation expense, non-GAAP
operating income was $152.5 million in the reported quarter, up
4.8% from $145.5 million in the prior-year quarter.
Net income on a GAAP basis was $72.7 million or 50 cents per
share compared with $70.7 million or 43 cents per share in the
year-ago quarter. Excluding special items such as amortization
and severance costs but including stock-based compensation
expense, non-GAAP net income was $105.3 or 72 cents per share,
compared with $98.5 million or 60 cents per share in the year-ago
Balance Sheet, Cash Flow & Share
BMC Software generated $347.2 million in cash flow from
operations in the reported quarter, compared with $212.9 million
in the year-ago quarter. The company exited the quarter with cash
and investments of $1.51 billion, up from $1.18 billion in the
BMC Applies For Privatization
BMC has also made a public announcement to go private. The
main reason to opt for privatization is the slow growth rate that
the company has been experiencing over the last several quarters.
Bain Capital and Golden Gate Capital together offered to pay a
sum of about $6.9 billion to buy BMC.
We believe that the company has taken a prudent decision, by
opting for privatization as this could help BMC take some
difficult decisions to tap the considerable opportunity in cloud
computing more quickly and efficiently. This could in turn
improve BMC's competitive positioning versus cloud computing
stalwarts such as
On the other hand, companies such as Harwood Feffer LLP and
Rigrodsky & Long, P.A. announced in separate statements that
they were investigating any legal claims against BMC. These
investigations are being conducted to determine whether the board
of directors has carried out its necessary duties before
privatization, providing proper disclosure of benefits and costs,
and offering full and fair consideration for the company's
shareholders. These investigations may delay the process of
privatization for BMC.
BMC reported mixed fourth-quarter 2013 results, with earnings
per share falling short of the Zacks Consensus Estimate but
revenues up marginally. The company also witnessed a decent
increase in its customer base and cloud computing bookings. We
remain wary about the conditions in Europe and competition from
Moreover, BMC has not been able to penetrate the cloud
computing market as expected. We also extend a word of caution
because of the softness in high-value orders, which indicates a
weak demand trend.
The company needs to revamp and restructure its business
model. Therefore, its decision to go private makes sense at this
juncture. We also consider it a positive for share prices that
have remained buoyant since news of its possible buyout first
started going round.
BMC has a Zacks Rank #3 (Hold).
BMC SOFTWARE (BMC): Free Stock Analysis
SALESFORCE.COM (CRM): Free Stock Analysis
MICROSOFT CORP (MSFT): Free Stock Analysis
ORACLE CORP (ORCL): Free Stock Analysis
To read this article on Zacks.com click here.