Following the trend of the IT majors, another leading software company BMC Software Inc. (BMC) is taking aggressive measures to cash in on opportunities available in the cloud computing space.
The company recently rolled out two new IT service management solutions, BMC Remedy OnDemand and BMC ServiceDesk, on Force.com. These products are based on the cloud computing platform and are expected to provide cost effective solutions to the customer. The new solutions offer “IT Service Management” by BMC and are capable of resolving critical IT problems quickly, without incurring additional cost on hardware, software or additional manpower.
This apart, as per another study conducted by technology research firm IDC in its 2009 cloud computing conference, the IT cloud services segment is expected to grow three times its current size, to a $42.0 billion industry by 2012. The firm also believes that cloud computing will grow throughout this period, taking care of around 25.0% of IT spending growth in 2012 and one third of it the next year.
Cloud computing enjoys strong demand and is being increasingly adopted by businesses. However, managing the way it is used will be very important. Another study conducted by Market Research Media predicts that the U.S. government’s spending on cloud computing is entering a phase of explosive growth. The segment is expected to grow at a CAGR (compound annual growth rate) of 40.0% from 2010 to 2015, crossing $7.0 billion in 2015.
Apart from cloud computing, acquisition has been another growth driver for BMC. This strategy has helped the company expand the product portfolio, leading to more comprehensive solutions. Growth prospects in the SaaS segment, position in the government vertical and strong cash generation abilities are other positives. However, we are a bit apprehensive about the intense competition from big players like International Business Machine (IBM), Hewlett-Packard Company (HPQ), EMC Corporation (EMC) and CA Inc. (CA), which bundle hardware and software offerings.
The company reported encouraging third quarter 2010 results, with earnings per share of 76 cents exceeding the Zacks Consensus Estimate of 60 cents per share. Revenue of $508.0 million was up 4.0% from the year-ago period. For fiscal year 2010, the company expects non-GAAP earnings per share of $2.64 to $2.72, but expects total bookings and revenue to increase in the low single digits, compared to the year-ago period.
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