Recently, Elliott Management Corp declared its intention to
) for $2.3 billion. Elliott Management offered $11.00 per share
or a premium of 15% on the Compuware's Friday closing price for
acquiring the company.
Headquartered in New York, Elliott, which owns an 8% stake in
the company, is mainly engaged in extensive research to resolve
any investment related problems. It has a total asset of nearly
Elliott Management through a letter stated that although
Compuware is a well-established company, its profit and growth
prospects were not quite impressive in recent times. Hence, with
the proposed acquisition, Elliott management is expecting to
reinstate the company's leading position in the software and
technology service sectors and increase its shareholders' value
in the long run through its extensive experience in the specified
After the proposal, the company's share surged nearly by 13.5%
to $10.82 on Tuesday. Year-to-date, the company's value soared by
Later, the company through a statement confirmed that it has
received the proposal and it will weigh and consider the offer.
Sandell Asset Management, which owns about 2.5% stake in the
company, has also agreed to the acquisition proposal.
In a different story, the company is likely to make an initial
public offering (IPO) of its Covisint Corp. segment. This was
done with the clear intent of raising the functionality of the
Earlier, Compuware reported earnings per share of 5 cents in
the second quarter of fiscal 2013, compared to 10 cents in the
year-ago quarter and 5 cents in the previous quarter. The
earnings in the reported quarter missed the Zacks Consensus
Estimate of 6 cents per share.
Total revenue for the quarter came in at $220.6 million,
declining 15.4% year over year and 2.5% sequentially. The company
reduced its revenue guidance from $1.04 billion to $1.05 billion
to $980-$995 million for fiscal 2013 along with earnings per
share of 36- 40 cents from 43-47 cents. Judging by the depressing
state of affairs in which the company now operates, the offer of
acquisition may appear advantageous for Compuware.
Compuware operates in an intensely competitive landscape.
BMC Software Inc.
). In the software business, the company is always under pressure
for innovating new products to attract new clients and also
maintain the existing associations which may appear to be
The current Zacks Consensus Estimates for the third quarter of
fiscal 2013 and for fiscal 2013 are 11 cents per share and 38
cents per share, respectively. The company currently retains a
Zacks #3 Rank, which translates into a short-term 'Hold' rating.
We also have a Neutral recommendation on the company's stock.
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