Tech Industry Analysis

Convio (CNVO) gets acquired by Blackbaud (BLKB) for $16/share - MGI Analyst Blog

Convio (CNVO) gets acquired by Blackbaud (BLKB) for $16/share - MGI Analyst Blog.

New Research: MGI Scorecard - Large Systems Vendors Oct 2011

New research published: "Large Systems Vendors Scorecard: October 2011"  @mgiresearch #IBM, #CSCO, #ORCL, #EMC, #Dell, #HPQ, #VMW, #BRCD, #NTAP, #JNPR

Our current, October 2011 vendor scorecard provides a qualitative rating for large systems vendors such as Hewlett-Packard, Oracle, Dell, IBM, EMC and Cisco. The note contrasts these ratings with quantitative MGI Index scores measuring business model efficiency and with growth and valuation parameters. The recent upheaval at HP provides an interesting backdrop to our rating scores. With a drop in HP stock, a number of analysts and investors have been turning positive on the company. We think that such enthusiasm is a bit premature. HP’s stock is cheap for a reason. In a related research note: “Who Benefits from HP Disarray?” we analyze the opportunities and threats for HP and its peer group.

Other recent MGI Research reports include:

Is Manhattan Associates an Acquisition Target?

Getting the Right IT Deal: A 20 Questions Interview with a leading IT contracts guru

CIO Critical Success Factors: Conversation with Martha Heller, a noted CIO recruiter

 Visit www.mgiresearch.com for additional information. To schedule analyst appointments, call +1 (888) 801-3644

New Research: Is Manhattan Associates an Acquisition Target?

New research report: Is Manhattan Associates an Acquisition Target? @mgiresearch #MANH

Despite the huge cash hoard sitting on software companies balance sheets, perennial predictions of a massive wave of 2011 industry consolidation have not materialized. SaaS company mergers are few and far between while enterprise software companies have been cautious to avoid any non-accretive deals. We believe that amongst several possible industry merger transactions, Manhattan Associates, a provider of supply chain execution software is now themost likely acquisition target. Among the short-list of potential acquirers are SAP, Oracle, Infor, and JDA Software as well as a few private equity firms. 

New Research: Getting the Right IT Deal - 20 Questions with Joe Galuszka

New Research: A significant amount of time, money and effort is spent in the evaluation, selection, negotiationand acquisition of technology assets. In spite of all of this effort, many companies chronically over-pay for those assetsand sign sub-optimal contractual agreements. Andrew Dailey of MGI Research recently conducted an in-depth interviewwith Joe Galuszka, a widely recognized expert in the area of IT Contract Optimization, Joe works directly with CIOs and CFOs to assist them in maximizing their negotiation leverage and achieving additional cost savings and advantageous contract terms and conditions. He has over 25 years of experience in the IT industry, and Joe’s negotiation experience spans both client buy-side and vendor sell-side engagements.

New Research - CIO Critical Success Factors: 20 Questions with Martha Heller

New Research:  - CIOs today face four major disruptive trends: cloud computing, mobile computing, social networking, and agile development. In addition to determining how to best leverage those trends for the business, CIOs are increasingly challenged with risks of security breaches, system downtime, and rising user demands for easier to use, faster to deploy IT systems to support today’s fast-moving, global business requirements. Andrew Dailey of MGI Research recently conducted an in-depth interview with Martha Heller, a well-regarded executive search consultant and Contributing Editor of CIO magazine. Based in Boston, Martha has placed CIOs and senior IT leaders at clientcompanies like Edison Learning, Key Bank, Hertz, BJ’s Wholesale Club and Providence Equity Partners, among others. Prior to executive search, Martha was the founder and Managing Director of CIO magazine’s CIO ExecutiveCouncil.

New Research - 20 Questions with CEO of CollabNet Bill Portelli

Agile is a massive change agent that is dramatically transforming timeframes, quality and economics of software development. As part of “20 Questions”- an MGI Research Interview Series with leading technology industry innovators, investors, and executives, Andrew Dailey recently conducted an in-depth interview with Bill Portelli, CEO and co-founder of CollabNet, a leading vendor of Agile tools and services. Prior to CollabNet, Bill was Senior VP and GM of Cadence Design Systems’ global consulting business. Since co-founding CollabNet with Tim O’Reilly and Brian Behlendorf (co-founder of the Apache Project), Bill has been at the forefront of collaborative software development tools for global enterprises and the SaaS delivery model.

 

New Research - 20 Questions with CEO of FinancialForce.com Jeremy Roche

In this 20 Questions interview, FinancialForce.com CEO Jeremy Roche shares his views on building financial apps in the cloud, leveraging the Force.com platform and on strategies for building a successful SaaS business.

Microsoft to Buy Skype: So This is Your Big Move?

Investors have been watching Microsoft for some time wondering what the company will do with its growing cash hoard that has reached some $50 billion.  As company observers know, Microsoft has been relatively conservative with regard to its acquisition strategy, that with the exception of the failed bid to acquire Yahoo, has until now, focused on comparatively small companies.  The pending acquisition of Skype is certainly large (particularly in price @ $8.5 billion), the immediate reaction of the investment community has been largely critical.

In developing our thoughts on the acquisition, our initial bias was toward being contrarian.  However, as we look at the various pros and cons behind the deal, we find ourselves siding with the generally critical view.   In fairness to Microsoft, the company has done an excellent job improving its MGI-X score, reflecting improving efficiency relative to its growth and investment in R&D.  For a variety of reasons, management has struggled to effectively communicate these changes.  

Our key observations are as follows:

 1)   As a strategic deal, there is no apparent or compelling vision as to how Skype visibly moves the needle in terms of revenue growth or profitability for Microsoft.  In watching the interviews of Microsoft CEO Steve Ballmer, we were thoroughly underwhelmed by the rationale cited for the deal.   If Microsoft wanted to integrate Skype into various product lines such as Microsoft Office, or Microsoft Phone, it certainly did not need to buy the company to achieve that goal. On the surface, it appears to be a defensive move to hold on to the SOHO/SMB markets vs Google (Google Apps + voice vs MSFT Office365 + Skype). On the positive side for MSFT, wireless networks to date have largely been built from the outside in. To MSFT’s credit, the next ten years may deliver a reversal. This means wi-fi and other micro-cell technology, combined with VOIP, could become a really big deal. Based on Ballmer’s presentation of the deal, this outcome would be accidental, rather than premeditated, but a shareholder plus nonetheless.

2)   As an economic transaction, aside from the fact that Microsoft will be able to acquire Skype on a tax efficient basis using offshore cash, the high valuation of the company in terms of price/sales, price to EBITDA, in our view more than offset the positive of the tax efficiency.

3)   Why didn’t Microsoft buy eBay, Research in Motion, or even SAP?  Any one of these transactions represents a more interesting opportunity than that of Skype.  In particular, Microsoft could have bought eBay and gotten as a bonus a 30% ownership stake in Skype.

4)   Buying Skype lessens the likelihood of any other large deals in the short term (six-to-nine months) – not due to any financial limitation, but rather given Microsoft’s conservative and uninspired acquisition strategy, or lack thereof.

5)   Deal appears to be almost more of a defensive move to protect existing revenue streams, rather than a means to increase revenues.

 Has Microsoft Missed its Window?  

 Please excuse the pun, but Microsoft transitioned from a rapidly growing company to a mature business (albeit with double digit revenue growth in many of its businesses) and may have missed the point-in-time opportunity to really leverage its scale and financial power by failing to move aggressively on non-linear acquisitions (or even a series of incremental strategic buys).   In fairness, Microsoft’s conservatism may be a hold over from the years in which they were battling anti-trust claims.

The company has failed to realize that good or great ideas can come from outside, and perhaps remains too focused on protecting Windows – a franchise that is likely to remain very durable regardless of strategic missteps or investor apathy.

 

New Research: Is #Agile Ready for Prime Time?

 20 Questions with a leading Agile expert, CTO of Rally Software Ryan Martens. 

What could users expect from Agile? Are companies underestimating the impact of Agile on their applications software development backlog and on business? What are the realistic time and productivity improvements? Why haven't more companies adopted Agile?

20 Questions with Tony Leng on CIO Success in the 21st Century

In a new research report (http://bit.ly/ihyzrk) published by MGI Research, Tony Leng - a leading CIO executive recruiter with Hodge Partners, defines key success factors for CIOs and how CIOs can position themselves for top non-IT jobs within a company.