CA to Acquire Watchmouse B.V. - Analyst Blog
02 Agosto 2011 - 5:30PM
Zacks
Information technology (IT) management software company,
CA Inc. (CA) recently announced that it has
entered into a definitive agreement to acquire privately held
Watchmouse B.V., an innovator in SaaS-based monitoring for cloud,
mobile and traditional Web applications.
With this acquisition, the company expects to utilize the
solutions provided by WatchMouse by exploiting the
globally-distributed infrastructure of more than 60 monitoring
stations in more than 40 countries. Utilizing the technology
enabled infrastructure, the company replicates real-user
transactions from these locations to provide rich, up-to-the-minute
insight into application performance and availability.
This technology is expected to add a critical dimension to
modern IT management and enhance efficiency in the IT delivery
process of the company. In particular, the acquisition will help
customers overcome the limitations of current organizational
approaches, breaking down the silos across development, testing and
operations.
Moreover, this acquisition will strengthen the company’s CA
Application Performance Management (APM) solution, which may in
turn help provide large enterprise customers with comprehensive and
flexible options to manage their applications within a single
solution set.
Moreover, Watchmouse is also expected to facilitate the
implementation of Nimsoft IT Management-as-a-Service strategy by
enabling customers to quickly and easily monitor response times for
different types of business services—from the cloud to the data
center.
This acquisition marks the continuation of CA’s strategy to grow
inorganically, which strikes a balance between investments for
further growth and returning cash to shareholders.
Apart from pursuing growth through acquisitions, the company is
leveraging cloud computing to enable organizations to source the
best components—internal, external, private cloud, public cloud,
mobile and more—to construct the most competitive business
applications without wasting much time and resource.
The company is also focused on providing advanced management and
security software required by organizations to take full advantage
of this evolution.
CA is slowly tapping the huge opportunity prevalent in the
virtualization/cloud computing space that should drive growth over
the next 2-3 years. Earlier, CA acquired cloud computing company,
Oblicore, to boost its cloud computing business. Therefore, the
company is set to benefit from the huge potential of the
virtualization/cloud computing domain going forward.
CA Inc. posted decent first quarter results exceeding earnings
estimates. Revenue also improved on a year-over-year basis.
However, the product demand trend was moderate in the reported
quarter. Keeping in mind the quarter’s revenue backlog, we believe
fiscal 2012 guidance is a bit conservative. We further believe that
CA Inc.’s endeavor to return shareholder value through share
buybacks and dividend increases will boost investor sentiment.
On the other hand, we are apprehensive about intense competition
in the software & cloud computing space from big players, such
as International Business Machines (IBM) and
Hewlett-Packard Company (HPQ). In addition, the
company’s high debt balance and European exposure may pose some
challenges going forward.
Currently, CA Inc. has a Zacks #3 Rank, implying a short-term
Hold rating.
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