BMC Wins Deal, Popular in Australia

| About: BMC Software, (BMC)

BMC Software Inc. (NASDAQ:BMC) sealed a deal with the Australian unit of Manheim, a premier online vehicle re-marketing/auction services provider worldwide.

Manheim will deploy BMC Software’s Remedy OnDemand service desk solutions to integrate and manage all its business units and operating departments under a single information technology (IT) roof. Manheim will club its IT service management platforms to curtail IT support costs and increase operational transparency.

BMC Software’s Remedy suites reduce complexity in ITSM and integrate customer support. They also help to deal with change management, asset management and request management services.

Though financial details of the deal were not disclosed, we see it as an affirmation of surging demand for BMC Software’s Business Service Management (BSM) platform. Remedy Service Desk Solutions are an integral part of the BSM suite.

In January, CenITex, the shared-services IT agency of the government of Victoria (Australia) selected BMC Software’s Business Service Management solutions. We think BMC Software’s IT solutions are gaining popularity in this part of the world, with consecutive deal wins increasing international revenues for BMC Software. Total international revenue increased 16.8% year over year and accounted for 50.8% of its total revenue in the recently concluded third quarter.

We remain encouraged by BMC Software’s impressive third quarter results, which were attributable to strong customer demand for its Service Automation, SaaS and cloud solutions. Growth prospects in most of its business segments, its position in the government vertical and strong cash generation abilities are other positives.

Though BMC Software is still the leading large enterprise software company, we are a bit apprehensive about growing competition from big industry players such as International Business Machines Inc. (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), EMC Corp. (EMC) and CA Inc. (NASDAQ:CA).

Currently, BMC Software has a Zacks #3 Rank (short-term Hold recommendation).