Zacks_Analysts' Blog : BMC to Acquire Numara Software - Analyst Blog

The Software-as-a-Service (SaaS) major BMC Software. (BMC) recently announced that it is set to acquire Numara Software, a provider of integrated IT management solutions for medium-sized businesses. The transaction is expected to be closed by BMC’s fiscal fourth quarter, which ends on March 31. However, the terms of the deal were not disclosed.

Post acquisition, Numara will offer different BMC products like FootPrints and Track-It!, which also complement BMC’s existing portfolio. We believe that this strategic move on the company’s part will supplement BMC’s Software-as-a-Service (SaaS) business, and also provide BMC the access to more than 13,000 service and asset management solution providers that enable IT organizations to improve the services they offer end users.

BMC has taken the acquisition route for growth. Earlier this month, BMC acquired I/O Concepts, a leader in the ioEnterprise line of mainframe console security, automation and consolidation solutions.

The acquisition is expected to allow BMC to improve the productivity of its customers by reducing their staff requirements and also enhancing systems availability for its Main View Solutions.

Previously, the company also acquired Phurnace Software, an automation software developer that helps to reduce the cost, complexity and risk of deploying and configuring Java-based applications on physical, virtual and cloud computing environments.

Acquisitions may help the company to diversify its businesses but growth remains impacted by weaker expenditure from different government and private customers. Moreover, concern over IT spending growth may have a dampening effect. The recent European economic turmoil will also remain a headwind for the next few quarters.

BMC is focusing on acquisitions after reporting modest second quarter results. The company is expected to see the negative impact of currency on total revenue and bookings. Moreover, no real growth in deal activity and low business prospects in the European region are factors working against it.

Moreover, we are a bit apprehensive about growing competition from big players such as International Business Machines Inc. (IBM), Hewlett-Packard Company (HPQ), EMC Corp. (EMC) and CA Inc. (CA), which bundle hardware and software offerings.

BMC currently holds a Zacks #4 Rank, which implies a short-term Sell rating.