) has announced the acquisition of application release automation
provider VaraLogix for an undisclosed amount. This acquisition is
expected to help BMC expand its DevOps portfolio, which is a tool
for IT professionals.
The resultant enhancement to the DevOps portfolio is expected to
increase the efficiency, accuracy and speed of application
development, which in turn would help IT professionals improve the
ROI for their companies. These advantages should help the adoption
of the technology and therefore convert to higher revenue for
The increasing volumes of software applications and their
updates are leading to new capabilities that could help companies
stay ahead in the race. However, companies generally treat the
installation of new applications cautiously, since any mistakes
could prove to be costly.
The acquisition is useful in this regard, as the collaboration
of the technologies of BMC and VaraLogix creates an abstraction
layer that enables IT teams to deploy applications even without
prior programming experience. It therefore also addresses the need
for advanced application specialists in the installation
Although competition is gradually intensifying in the SaaS
space, BMC's focus on its Service segment has enabled it to regain
some market share. This apart, the BMC RemedyForce is gaining
momentum and is expected to generate additional revenue. Again this
acquisition is expected to affect the service business in a
Moreover, the company is slowly expanding its customer base both
on account of market expansion and at the expense of competitors.
On the other hand, rationalization of expenditure by different
government and private customers may weigh on the overall business
volumes of the company. The current economic turmoil may also
affect the business going forward.
The company witnessed growth in most of its business segments
and generated decent cash flow in the first quarter of 2013.
However, we are a bit apprehensive about the bleak business
conditions in Europe. Moreover, growing competition from big
players such as
) is a challenge for the company.
The company carries a Zacks #3 Rank, implying a short-term Hold
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