BMC earnings show growth despite downturn

IT management software maker proves it can succeed even during a recession and that partnering with heavyweights like Cisco helps.

BMC fiscal 2010 earnings show the company navigated the rough waters of an economic downturn well, emerging unscathed and on target for future financial success.

BMC recently announced its fiscal 2010 fourth quarter and full-year revenue, showing some growth and more savvy in forging partnerships that will pay off now and in months to come, according to industry watchers.

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“As software companies pull through the recession, BMC Software passed through relatively unscathed, posting only one quarter of receding revenue in calendar 3Q09; however, profitability over the course of the year has been increasing as the company exercises tight fiscal control,” according to Jessica Breen, analyst covering enterprise software for the Software Business Quarterly (SBQ) for Technology Business Research Inc. (TBR). “Closing fiscal calendar 2010, the company maintained 2% growth year over year, reaching nearly $2 billion in revenue.”

According to BMC, fiscal 2010 fourth quarter total revenue was up 3% from the year-ago period to $491 million. License revenue reached $201 million, representing an increase of 5% compared with fourth quarter fiscal 2009 results. And full revenue for fiscal 2010 topped out at $1.91 billion, a 2% increase over the previous fiscal year. BMC also reported it had garnered $758 million in license revenue for fiscal 2010, a 7% increase over fiscal 2009.

BMC technologies such as its Atrium and acquisitions of companies like Tideway as well as partnerships with Cisco helped the company emerge from the economic recession unscathed, analysts say. The company also embraced the software-as-a-service (SaaS) delivery model and has been forging inroads into cloud computing with partners such as Salesforce.com.

“Success with customer adoption of BMC’s IT process automation offering helped to lead the company in revenue growth. BMC drives a value proposition with the Atrium Orchestrator, which focuses on customer benefits, like bringing higher value to existing IT infrastructure and lowering costs,” according to TBR’s Breen. “BMC promotes IT process automation as a tool to increase IT efficiency, a message that resonates well given the squeeze on IT budgets.”

Even with its successful Cisco partnership, which will “provide management software for Cisco’s Unified Computing System servers” as well as “provide revenue and partner growth opportunities for the systems management vendor,” BMC could do more with partnerships via virtualization powerhouse VMware and its parent company EMC, with its storage technologies. Going forward, BMC should forge more technology partnerships to help it compete against others vying for the lead in the enterprise systems management market

“The potential for BMC Software to partner with VMware would create further virtualization opportunities, as BMC could provide its systems management expertise, while VMware provides another virtualization platform with a broad customer base for BMC to deploy its Remedy desktop solution. Meanwhile EMC offers the storage solutions missing in BMC’s IT stack,” Breen writes in a recent commentary. “TBR believes it is essential for BMC to create new alliances to successfully launch itself as a vendor of systems management solutions to keep pace with CA, HP, IBM, Symantec, and Oracle.”

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