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Businesses big and small often have a difficult time keeping track of their employees. Whether their workers are tethered to a computer screen, holding down a spot on an assembly line, or out in the field making sales and service calls, most companies depend on software solutions to assist in their scheduling and work-force management.

Given the complexities of doing business in the 21st century, ClickSoftware Technologies (Nasdaq: CKSW) is successfully selling products that simplify labor management to businesses of all sizes in North America, Europe and other regions, including Asia. Its business partners that help cross-sell ClickSoftware wares to their customers include International Business Machines Corp. (NYSE: IBM), Accenture Ltd. (NYSE: CAN), Microsoft Corp (Nasdaq: MSFT) and SAP AG (NYSE: SAP).

In the past year, investors have seen the stock price of the Israel-headquartered company more than double, with plenty of hiccups along the way, but where can it go from here?

ClickSoftware Technologies, which bases its U.S. operations in Burlington, Mass., has a mature suite of software products reflected in the roster of big companies that have adopted them: Best Buy Co., Inc. (NYSE: BBY), Xerox Corporation (NYSE:XRX), Ericsson, Vodafone Group Plc (NYSE: VOD) and several large utilities, to name a few. The ClickSoftware offerings help with shift planning, workload forecasting, wireless work force management and business analytics.

During a July 11 presentation at the C.E. Unterberg, Towbin Emerging Growth Conference, ClickSoftware’s chief financial officer, Shmuel Arvatz, outlined how Best Buy was using his company’s products since the electronics retailer became a customer in late 2006.

“Best Buy is a new customer of ClickSoftware,” he told conference participants. “They actually are scheduling the Geek Squad—you’re all aware of the technicians that come to your home and fix the mobile and the network … so they schedule about 5,000 Geeks. They are now planning to expand into … other divisions such as home theater. … There is a huge potential with Best Buy.”

Still, with a market capitalization of less than $150 million, ClickSoftware falls in the microcap category. The company’s stock has been publicly traded since 2000, so it’s not new to microcap investors. ClickSoftware also successfully survived the dot-com bubble, having been spawned in 1997 from the consulting work of its founder, the chairman and chief executive officer, Moshe BenBassat.

The question is whether ClickSoftware could be ready to break out, or perhaps be taken over by a bigger player that can infuse it with the resources that it might currently lack?

ClickSoftware shows a P/E ratio of around 38 for the year ending in December 2007, a trailing P/E of about 45, and a P/E for the year ending in December 2008 of about 25.

For the quarter ended June 30, ClickSoftware Technologies reported net income of $1 million, or $0.03 per share, a substantial increase from the $400,000, or $0.02 per share, in the same period in 2006. Revenue increased 32% to $10.5 million.

“The second quarter was another period of considerable growth for ClickSoftware, with strong financial results, operational achievements and strategic growth across all parameters,” CEO BenBassat said in a statement accompanying the financials release. “In response to an increasing demand from both existing customers and new prospects, we continue to scale up the organization, such as a new subsidiary we just formed in Japan. … Looking forward, we believe that we are positioned for continued strong growth.”

Ahead of the July earnings report, ClickSoftware saw its shares rise to a 52-week high of $6.76, while its low point in the past year was $2.27 last Oct. 5. Since the July 19 high, shares mostly waned in late summer along with the broader market, but recently rebounded to trade around $5. Shares of the company closed at $5.33 on Tuesday.

In a June letter to shareholders, ClickSoftware noted that 2006 revenue increased 35% to $32.4 million, as the company reversed a net loss of $2 million in 2005 into a $2.1 million profit last year. As a company helping other businesses improve their efficiencies, ClickSoftware also showed that it was operating more efficiently, trimming operating expenses in 2006 to 56% of revenue, compared with 68% in 2005.

Thomson Financial shows a median price target of $7.63 on ClickSoftware from the analysts it surveyed.

Following the Q2 financials release, analyst Matthew Weiss of Maxim Group initiated coverage of ClickSoftware on July 26, with a “buy” rating and an $8 price target, writing to clients that the company “has recently expanded the gap between itself and its closest competitors.”

In his research note, Weiss wrote: “Our positive investment thesis on CKSW shares stems from the company’s strong competitive positioning in a growing market, solid customer base and channel relationships, and recent positive business momentum and operational execution.”

Weiss further explained that “Gartner predicts that the market for field service management software/services will grow at an 18% CAGR (compound annual growth rate) through 2009. We expect CKSW to grow in excess of the market and model 32% and 25% year over year top-line growth in 2007 and 2008, respectively.”

At Discovery Research, analyst Ruchit Sutaria rates ClickSoftware at “overweight.”

All told, analysts following ClickSoftware surveyed by Thomson are expecting flat earnings when results for the just-ended quarter are released in late October, around $0.03 per share. But they expect the company to report revenue 25% better than the third quarter of 2005, increasing to $11 million.

For all of 2007, Thomson estimates call for earnings to improve 63% to $0.13 a share, and a 32% revenue increase to $43 million. That’s slightly more optimistic than the updated revenue guidance issued by the company while reporting its midyear results in July, which expects revenue of $41 million to $42 million this year. The company’s estimate was $2 million better than the 2007 guidance issued in February.

As is the case with many microcaps, investors must be able to stomach wild price swings. For instance, after hitting its July high, two sessions later the shares plunged 24% before the company’s quarterly earnings release. The stock rebounded slightly when investors received the results. Back in April, ClickSoftware gained 13% after announcing a service-optimization contract with a “leading document management company.”

Internet message boards have circulated rumors of a potential takeover of ClickSoftware from time to time, but there have been no indications that anything is in the works. Investment managers Austin Marxe and David Greenhouse, who run The Cayman Fund, did hold an 11% stake in the company as of June 30. Company founder BenBassat is the biggest shareholder, possessing more than 18% of outstanding shares.

Source: ClickSoftware Technologies: Ready to Breakout?