CA Xtrackers California Municipal Bonds ETF

Technology major and software services provider BMC Software (BMC) recently secured a contract from NEC BIGLOBE of the NEC Group.  With this contract, NEC BIGLOBE expects to deploy BMC’s Remedy IT Service Management solutions to improve its incident handling efficiency by 30.0%.

This new technology will connect network devices across geographies, including more than 10,000 physical and virtual servers. Previously, all incidents in this environment were manually processed, making it difficult for BIGLOBE to keep pace with business growth.

BMC Remedy IT Service Management Suite is expected to automate handling of incidents, thus leading to streamlined processes that ensure customer satisfaction.  It is expected that this new technology will help BIGLOBE to automate operations, thereby saving up to 800 hours per month and automate two-thirds of all incident handling by the end of September 2011.

The growth in BMC’s customer base has come from market expansion, as well as at the expense of competitors. One of the recent deal wins is Australia’s Monash University. The university selected BMC Software’s Business Service Management (BSM) platform to support its information and communication technology (ICT) services. This new platform has been developed jointly by Monash and BMC.

This apart, we have noticed an encouraging trend in recent times, wherein various government agencies perceive the need for professional management of their IT infrastructure. This has resulted in various government contracts, particularly from U.S. defense organizations.

Apart from providing normal IT solutions and services, U.S. Government agencies have also chosen BMC Software for different IT initiatives such as cloud computing, service desk consolidation and management of hybrid IT environments.

We view these wins as significant, not only because government contracts are usually lucrative, but also because they tend to stretch over a number of years, thereby lending stability to revenues. Moreover, new wins increase penetration at government agencies and indicate market share gains.

BMC reported decent first quarter results and provided a positive outlook for fiscal 2012. Acquisitions have expanded BMC’s product portfolio, helping the creation of enhanced solutions.

Growth prospects in most of its business segments, strong position in the government vertical and robust cash generation abilities are other positives. However, we are a tad apprehensive about growing competition from big players such as IBM Inc. (IBM), Hewlett-Packard Company (HPQ), EMC Corp. (EMC) and CA Inc. (CA), which bundle hardware and software offerings. 

BMC currently holds a Zacks #3 Rank, which implies a short-term Hold rating.

 
BMC SOFTWARE (BMC): Free Stock Analysis Report
 
CA INC (CA): Free Stock Analysis Report
 
EMC CORP -MASS (EMC): Free Stock Analysis Report
 
Zacks Investment Research