Lawson Software Poised for Growth - Barron's

Aug.31.08 | About: Lawson Software, (LWSN)

Lawson Software (NASDAQ:LWSN), a global provider of enterprise software, is hovering around $8 a share from an $11.39 high in October. Barron's Mark Veverka thinks that makes it a good time to invest.

Shares had risen 26% in October on a bullish Barron's story but fell when some glitches in the company's services business hurt revenue and margins. The credit crunch hasn't helped either by reducing corporate demand and outlays.

Still, Lawson's is in good shape and will be in even better shape when the markets start to recover. It has fixed its services problems, reined in expenditures and expanded its sales force. It reported almost 25% growth in license revenue during the fiscal year that ended in May. With a $1.4B market capitalization, Lawson's strategy is to target mid-size companies in five distinct market segments in order to close deals before its bigger competitors can. Lawson's is also in the middle of a three-step plan to improve profit margins. The plan includes outsourcing some operations to lower-cost regions and re-balancing its product mix. The company expects margins of 11-17% this year, and a long-term goal as high as 19% is not out of the question.

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  • Lawson approved a $200M stock buyback plan in July, bringing its total repurchase to $239.5M.
  • Lawson recently signed a multi-suite software deal with Santa Ana, California, the financial and governmental center of Orange Country and the ninth largest city in the state. Lawson will help the city simplify and automate its financial reporting.