Jacada Decides to Focus on Growth

Today, Jacada Ltd. (Nasdaq: JCDA), a leading provider of unified desktop and process optimization solutions for customer service operations, announced that the company sold its Application Modernization Business to Software AG for $26 million. The effective date of the transaction is January 1, 2008.

This deal seems to be about focus — about positioning Jacada as a pureplay in the call center solutions business. The firm provides a single, unified workspace for customer service organizations managing lots of legacy and disparate software systems.

Jacada President (and actually, the new CEO), Paul O’Callaghan, said the following about the deal:

During the past 3 years, our call center solutions business has grown at a compounded annual growth rate of 61% and represents 95% of our $12.9 million backlog as of September 30, 2007. We expect that the growth we have seen in this business will continue at a similar pace throughout 2008.

This sounds pretty good. We’ve written positively about Jacada before, and like the direction that the company is taking. Along with the deal, we’ve seen Paul emerge as the new CEO with the founder and former CEO, Gideon Hollander, sliding into the Chairman seat. This is a company maturing and taking the right, and albeit tough, steps of the founder stepping aside.

O’Callaghan joined Jacada as President in May 2006, after successfully holding senior management roles in companies including Optio Software (OPTO.OB), Cisco Systems (CSCO), IMNET Systems, XACCT Technologies, Idapta and Network Systems Corporation.

His experience in sale-oriented tech firms has allowed the company to grow its pipeline of new deals and land material type deals like recently announced deals with Central Hudson Gas & Electric, a regulated gas and electricity provider serving approximately 367,000 customers in eight counties of New York State’s Mid-Hudson River Valley.

Keep in mind that the company has a market cap under $80 million, and a cash position of $35 million. If you another infusion of cash to a company that had guided for 2007 revenue growth of 23 - 27%, and get the firm completely focused on the call center business growing at a CAGR of 60% plus, then you would have a nice little Israeli microcap.

Disclosure: The author does not hold a position in JCDA.