While Mr Middleton said that Geac would not rule out targeted acquisitions, he said it is trying to throw off its image as predominantly an industry consolidator. You are going to see us acquire and partner with greater purpose. We have turned our back on being a serial acquirer, he told ComputerWire.
But the Ontario, Canada-based company has much to do to return to strong growth in its license revenue: its latest quarter saw software license revenue of $15.1 million, down 1.4% from $15.3 million a year ago.
Over the years Geac has grown considerably via acquisition. Recent deals include the company’s $52 million acquisition of BI and performance management provider Comshare in August 2003, and the $47 million purchase in September 2002 of Extensity, which had one million seats worldwide for its automated employee-based finance processes. Previous acquisitions include mid-market ERP vendor JBA; Interalty; the real estate unit of GTE Enterprise Initiatives; the assets of Princeton Network Systems; Management Data; the midrange software business of EBC Informatique and many more.
But Mr Middleton said the company’s president and CEO Charles Jones, who was hired to the post in July 2003, is now looking harder at how the company can organically grow license revenue. Where acquisitions are made, they will be in a well-defined area the company is targeting, according to Mr Middleton.
The company sees good growth prospects in business performance management software aimed at companies’ CFOs as well as the rest of their finance departments, which helps them to implement and execute strategy. Indeed the company’s mantra is now Geac: Software for the CFO.
That strategy seems to at least have helped the company onto a stable footing after it over-reached itself in 2000 with too many, overly-diverse acquisitions. For the six months ended October 31, 2004 the company announced sales of $213.3 million, virtually unchanged from the $213 million it posted for the year-ago period. It improved its profitability, however, posting earnings of $28.7 million compared to $19.6 million in the same period a year earlier. The company’s stable results recently have left it with a stock price on Nasdaq at the time of writing of $8.09, down only a little from its 52-week high of $8.75.
As of October 31, the company still had $122 million worth of cash and cash equivalents, and with its market capitalization at $686 million at the time of writing, it has plenty of cash and equity if it does choose to make further, albeit more targeted acquisitions. With heavyweights like Oracle and PeopleSoft consolidating in the enterprise applications space, as well as midrange and vertical competition from the likes of SSA Global, it seems unfeasible that Geac’s acquisition of Comshare in August 2003 will be its last.
