BMC Software Wins Deal - Analyst Blog

Deal wins continue for BMC Software Inc. (BMC). After sealing a couple of major deals in the preceding month, the leading large enterprise software company clinched a deal from Hong Kong based information technology (IT) services provider, Automated Systems Holdings Limited (The ASL Group).

BMC Software shares a long standing relationship of over 15 years with the ASL Group. The latter will now deploy BMC Software's Remedy Service Desk Solutions (interactive voice response service, short messaging services and IP phone systems) for its call centers. With BMC Software's IT solutions, the ASL Group will be able to upgrade its service desk capabilities to better serve corporate customers.

Though financial details of the deal were not disclosed, we believe the agreement is an affirmation of the rising demand for BMC Software's Business Service Management (BSM) platform. The Remedy Service Desk Solutions are the integral part of the BSM suite. Moreover, BMC Software will now have a stronger foothold in Hong Kong.

A few days back, the company's Business Service Management solutions were deployed by CenITex, the shared-services information technology (IT) agency of the government of Victoria (Australia). The deal win was expected to increase BMC's international revenues, which accounted for 49.0% of its total revenue in the recently concluded second quarter.

In spite of continuous deal wins and expanding global exposure, BMC Software's share price remains depressed. Revenues from the mainframe division have not increased in the last couple of years due to replacement of mainframe systems by distributed computing networks, in which different parts of a program are run simultaneously on many computers connected in a network.

BMC Software also faces competition in the mainframe market with CA Technologies (CA) and Compuware Corp. (CPWR), both of which also rely on their mainframe businesses for nearly half of their revenue.

Apart from these, the challenges posed by industry leaders, such as International Business Machines Inc. (IBM), Hewlett-Packard Company (HPQ), EMC Corporation (EMC) and CA Technologies due to their strong positions in cloud computing and IT solution markets are also concerns.

Currently, BMC Software has a Zacks #4 Rank, implying a short-term Sell recommendation.

 
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