Todd deSlaughter, VP and general manager of the company’s OpenView Business Unit, said neither business is an attractive target. CA’s market cap is too high, he said. BMC’s growth has stagnated in the mainframe area. The growth it is seeing from Remedy seems to be in isolation, and it does seem to be in a real quandary over its Patrol business.
HP’s CEO Mark Hurd has stated on numerous occasions that he intends to continue investing in the company’s software business. At the time of his arrival as chief executive last summer, the word was that HP insiders considered a must-do acquisition was needed to plug the hole in its asset-management software portfolio. Hurd duly obliged, and stumped up $425m in cash for Peregrine Systems Inc in September 2005 as a means of redoubling its sales efforts for business service management initiatives around HP’s OpenView systems and network management suite.
In contrast, a takeover of either of its rivals in the systems-management segment would be an extreme propositon, albeit one the market contuinues to speculate about.
CA’s stock has fallen 24% since mid-January and is currently trading at a 52-week low, with a market capitalization running at $11.5bn. CA’s CEO John Swainson recently added to the recent stream of bad news coming from the Isandia, New York-based business, saying that it was still dealing with some serious operational issues. In recent months he has had to cope with the loss of four of his top executives.
The word on the street on BMC, whose performance lately has been upgraded to in-line from underperform by market analysts, is that the business has become an attractive target for a private equity takeout. Lately, it has been through a series of cost-cutting initiatives, property divestments, and several rounds of stock repurchases. Its market capitalization is running around $4.8bn.
HP has cash reserves of about $14bn.
deSlaughter said the company will continue to invest in its software business, by putting money and effort into internal product developments, by working with its software partners, and on mergers and acquisition of key technologies. Asset-management was at the top of the list, he said, referring to last year’s Peregrine takeover. Other areas he hinted the company was looking at included the area of application dependency mapping, and project portfolio management.
The Peregrine deal has worked, he claimed. We have exceeded the revenue plan, and hit 95% retention of the Peregrine staff among those that were made offers. Overall, the software business is up 26% year-on-year.
OpenView is center stage in HP’s software strategy, and the company has invested well over $1bn over the past 24 months to augment the venerable systems suite with acquired technology from the likes of AppIQ, Consera, Novadigm, Persist , RLX Technologies,Talking Blocks, and TruLogica.
