Earnings Preview: BMC Inc. - Analyst Blog
30 Luglio 2012 - 7:01PM
Zacks
BMC Inc. (BMC) is scheduled to announce its
first quarter 2013 results on July 31, 2012 and we do not see much
variation in the analysts’ estimates at this point.
Third Quarter Overview
The company reported fourth quarter 2012 earnings per share of
59 cents, lagging the Zacks Consensus Estimate of 66 cents.
Total revenue in the reported quarter was $564.7 million, up
0.4% year over year. While none of the segments performed well in
the quarter, the SaaS business did see higher recurring revenue and
total bookings.
Operating income dropped significantly despite flattish revenue
growth because expenses increased a considerable extent and the
company was not able to implement efficient cost-control
measures.
Fiscal 2013 is not expected to be much better, as the company
expects non-GAAP diluted earnings per share in the range of $3.49
to $3.59, up from $2.67. BMC expects cash flow from operations to
be between $800.0 million and $850.0 million for fiscal 2013, which
at the midpoint represents a mere 3% increase from fiscal 2012.
Agreement of Analysts
Out of the seven analysts providing estimates for the first
quarter, none revised their estimates over the last 30 days. There
were also no estimate revisions for fiscal 2013 and 2014 estimates
over the last 30 days. However, estimates have moved down over the
last 90 days, following the company’s weak fourth quarter results
and 2013 outlook.
The lack of estimate revisions primarily reflects the absence of
any major catalysts over the last 30 days. Consequently, the
analysts are also maintaining their outlook for the first quarter
of 2013.
Some of the analysts are of the opinion that although
competition is gradually intensifying in the SaaS space, BMC’s
focus on its Service segment has enabled it to regain some market
share. This apart, the BMC RemedyForce is gaining momentum and is
expected to generate additional revenue.
Moreover, the company is slowly expanding its customer base both
as a result of market expansion and at the expense of competitors.
Australia’s Monash University selected BMC Software’s Business
Service Management (BSM) platform in order to support its
information and communication technology (ICT) services.
On the other hand, rationalization of expenditure by different
government and private customers may weigh down the overall
business volumes of the company. The current economic turmoil may
also affect the business going forward.
Magnitude of Estimate Revisions
The magnitude of revisions is therefore minimal, with no
movement over the last 30 days. However, estimates have moved down
since the company reported its fourth quarter results.
Overall, estimates for the upcoming quarter have dropped 3 cents
to 60 cents over the last 90 days. Again, estimates for fiscal 2013
and 2014 have gone down by 6 cents and 20 cents to $2.91 and $3.22,
respectively, over the last 90 days.
Recommendation
BMC reported unexciting fourth quarter results but guidance was
modest for fiscal 2013. However, the company witnessed substantial
cloud bookings.
This apart, industry experts believe that the BMC version of the
SaaS-based ITSM offering is not gaining traction. But new deal wins
by the company and its customers provide the much needed incentive
for the investors.
Moreover, we are a bit apprehensive about the 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
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
INTL BUS MACH (IBM): Free Stock Analysis Report
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