A recent technology tie-up has taken place between BMC Software ( BMC ) and Cisco Systems Inc. ( CSCO ), according to which BMC has decided to support the Cisco Network Services Manager across its cloud management product line, which includes BMC Network Automation and BMC Cloud Lifecycle Management. The two companies now have a strategic alliance with more than 25 successful joint cloud customers, which includes Telstra, QTS and Harris Corp.
Cisco Network Services Manager is expected to get good support from BMC across its cloud management product lines. This integration with Cisco's innovative network management solution is expected to provide simplicity and value to the customer's of the joint venture company.
Joint venture helped the company to improve its technology, which in turn helped in new product introductions thereby helping the company attract new customers.
Concurrent with this trend, the company recently introduced a self-service mobile app and business intelligence enhancements for its powerful workload automation solution, Control-M.
The company has further supplemented this solution with new features, including a new wizard conversion toolset that makes it simpler and quicker for companies to consolidate Control-M and achieve improved productivity and efficiency. This new product is expected to have many takers as it has a positive effect on the productivity of the client company.
Although some industry experts believe that the company does not have new product introductions and joint ventures have also been few and far between, we believe that linear growth does provide a level of confidence heading into the latter part of the year. Moreover, the Service Automation business of the company is expected to grow in the next few quarters, touching a range of 25.0% - 30.0% on a year-over-year basis. This will boost ESM license revenue, and thereby generate a modest acceleration in aggregate revenue.
On the other hand, growth may be impacted by weaker expenditure from different government and private customers. The recent European economic turmoil may add to these pressures over the next few quarters.
Moreover, the company is trying to re-build its sales model, which addresses sales compensation and attrition, and implementing new strategies to manage sales efficiently. BMC is also taking extra measures to improve its business pipeline. This rebuild will help the company to improve its business volume, which may be reflected in the results of the upcoming quarter.
The company came up with decent second quarter results. Moreover, BMC also provided mediocre guidance for fiscal 2012. This apart, BMC witnessed a substantial reduction in total bookings. BMC witnessed growth in most of its business segments, and witnessed decent cash flow. However, we are a bit apprehensive about the bleak business conditions in Europe.
The shares have a Zacks #3 rank, implying a short-term Hold recommendation.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.