Rob-interesting comments.
Cash flow is definitely a valuable measure. However, it's often difficult to predict when times start getting rough for a company, such as BMCS. Then, if god forbid, the company were to start breaking even or losing $, how valuable would cash flow be then? Sales have been fairly predictable for BMCS. So, it does offer some primitive measure of valuation.
I don't believe IBM is interested in CA either. Wang is way to independent and has run a pretty flaky organization for a long time. Then again, I never even implied that IBM was interested in CA. May be to big a fish for IBM to swallow even if they were interested.
As for BMCS, I stand by my suggestion that IBM might be interested in them. They may not be of course -- I do not claim to know. Nor am I convinced that anything is imminent. Let's just say that my curiosity is definitely aroused at this point.
As for IBM's software side of the business, most of the 1990's and certainly the 1980's were a long time ago. If you look at OS/2, AIX, and such, then yeah, I agree with you. IBM's software achievements have been marginal. However, take a look at some of the software acquisitions big blue has made, namely Lotus and Tivoli. Lotus has done okay. Don't have numbers off hand to back that up, but they do have products that actually sell -- notes, domino, ...
More importantly, Tivoli had annual revenues in the area of less than $50 million when IBM bought them back in 1996. Last year, Tivoli's revenues were nearly $3 billion! I've heard from some of my Tivoli buddies (I used to work there for about a year and a half) that Tivoli's revenue goals are $20+ billion within 5 years. Who knows if it's achievable, but based on their track record, I wouldn't say it's impossible.
Who are Tivoli's biggest competitors? Well, BMCS ranks right up there at the top. And I do know that earlier this year there were rumors at Tivoli that IBM was eyeballing BMCS. We were shocked and stunned. Why in the heck would we buy the competition? Initially, I said that there was no way it could happen. There were overlapping product lines, there was a fair amount of "bad blood" between the two companies, and BMCS was so doggoned expensive (something like a $15 billion market cap at the time). Then I started looking at some of the pro's and cons of such a merger. That was back when BMCS was $50-60/share and climbing. Throw in that it's so darned cheap now, and getting cheaper every week, and it does make sense to me to at least re-raise the question of whether IBM could potentially make a pass at BMCS. Would I invest in BMCS based soley on that? Of course not. Do due diligence. It still applies. However, I just happen to think that BMCS will come back with a vengence someday whether they stay independent or not.
So, I'm buying more BMCS as it continues to dip. Not so with CA, though. That company just seems so flakey to me, even though I'm sure it will come back strong some day.
Good luck,
-John |
