WebSideStory provides hosted website analytics and search software; CEO Jeff Lunsford discussed his view of in-house R&D and acquisitions on the company's November 2nd Q3 earnings results conference call. Extracts:
… By the end of the year we will have doubled our core R&D capacity by establishing an offshore development center using the same management talent I used at my previous company, TogetherSoft, to revolutionize the software development tools market. So this is a known team to me and we're real excited about what we're doing over there. There's a massive amount of innovation going on in digital marketing right now, as everyone knows, and we need to be able to invest aggressively in R&D to continue to be a driver of that advancement.
As mentioned above, the integration of Atomz [a provider of search, content management and marketing software] is proceeding on plan. This transaction has proven as strategic as we thought it would be, as well as nicely accretive, proving out in excess of about 5% accretive on an EPS basis. Given the growth numbers Tom laid out, the organic growth plan is clearly working. If we can find more teams like Atomz to partner with, you might see us augment that organic growth with more selected M&A activity, but we're in the fortunate position of not needing to buy anyone to continue growing this business.
(Quotes are from the CCBN StreetEvents transcript.)
Full disclosure: short WSSI at time of writing.