Fortive On Target In The Second Quarter And Doing Yet Another Deal

Investors can’t say that Fortive (FTV) management doesn’t deliver on its promises – management at this diversified multi-industrial said they wanted to deploy at least $6 billion into M&A that would skew the company toward more higher-margin recurring revenue, and they have done exactly that. While second quarter earnings were a little choppy, they basically met expectations and the turbulence seen in some of the businesses wasn’t all that different than what comparable multi-industrials like Illinois Tool Works (ITW) and Dover (DOV) saw in their operations.

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Fortive On Target In The Second Quarter And Doing Yet Another Deal

Seeking Alpha: The Cloud Tail Keeps Wagging Oracle

I look at Oracle (NYSE:ORCL) for largely the same reasons I look at companies like Cisco (NASDAQ:CSCO) - the search for relatively less volatile, undervalued, big-cap tech stories that can offset the risk of owning a collection of more aggressive plays. In the case of Oracle, though, I think I've found more things that concern me than encourage me, but those are short-term issues that I believe the company can address. What's more, the valuation would seem to suggest that a lot of these worries are in the price, and that this one may be worth a closer look.

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The Cloud Tail Keeps Wagging Oracle

Seeking Alpha: Aspen Technology - Trees Don't Grow To The Sky

I'm a fan of the industrial and process automation sector, as I believe automation is a major factor in reducing operating costs across a variety of industries. As a leading provider of process optimization software, and one of the very few that is not captive within a much larger company, makes Aspen Technology (AZPN) a company worth knowing.

Valuation is problematic here. A forward EV/EBITDA ratio of over 31 and a forward EV/revenue ratio of over 10 certainly underline some of my concerns. Even though potential long-term free cash flow growth of 10% is quite attractive, it takes some pretty unconventional thinking to argue that Aspen is any kind of bargain today.

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Aspen Technology - Trees Don't Grow To The Sky

Investopedia: Workday Surfing The SaaS Wave

Emerging ERP vendor Workday (Nasdaq:WDAY) is one of the most expensive names in the software space today, as investors are seemingly happy to pay huge multiples for shares in a company that many believe can seriously challenge large incumbents like Oracle (Nasdaq:ORCL), SAP (NYSE:SAP), and Microsoft (Nasdaq:MSFT). So long as the company can continue to deliver growth ahead of demand expectations, the party will most likely continue and it won't surprise if Workday's shares hit three digits at some point in 2013. That said, this is a story where valuation leaves no margin for error, so investors should understand what they're getting into before buying shares.

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Investopedia: Microsoft Critics Get Their Way, As Ballmer Announces Impending Retirement

In all the time I've written on Microsoft (Nasdaq:MSFT) it seems like readers/investors always came together on at least one topic – they really didn't like CEO Steve Ballmer. While I think Ballmer has often gotten a bad rap and that Microsoft is better-positioned in enterprise software and services than commonly believed, trying to make that case is tantamount to spitting into the wind.

Under Ballmer's leadership, Microsoft has lost close to half of its value. Again, I think you could argue that almost anybody taking the job was going to preside over a significant erosion in market cap, as Ballmer took the CEO position of Microsoft just three months before the tech bubble peaked. In any case, I will side with the critics who feel that, whatever the quality of Ballmer's vision for Microsoft, he did a poor job of selling the Street on it.

Now they won't have Ballmer to kick around much longer. On Friday morning, Ballmer announced his intention to retire from the job within 12 months, with the exact timing tied to the search committee finding a new CEO for the company.

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Investopedia: Workday Working Some Major Market Mojo

One way or another, Workday (Nasdaq:WDAY) is going to be a fun stock to watch. Investors angered by the rich valuations once awarded to Salesforce.com (NYSE:CRM), and there certainly were plenty of them, are probably going to be apoplectic over the valuation on the shares of this fast-growing SaaS enterprise software vendor. Although I can't conceive of a credible scenario in which these shares look anything close to fairly valued, I do believe the company will be quite successful and the interplay between the company's rapid growth and share gains in the enterprise resource management/planning (ERM/ERP) market and its valuation in the stock market will be very interesting to watch over the next few years.

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http://www.investopedia.com/stock-analysis/082013/workday-working-some-major-market-mojo-wday-orcl-sap-msft.aspx

Seeking Alpha: Software AG - All The Buzz, But Can It Deliver The Honey?

If you're a software company these days, you pretty much have to be positioned for Big Data, Cloud, Mobile, and Social/Collaboration to get investor attention. The extent to which these are real and meaningful concepts or just buzzwords is a topic for another day, but the point stands that Software AG (STWRY.PK) has gone out of its way to make sure you know it is targeting these markets.

The question is whether or not the company can deliver. Software AG is a veteran company, but its recent record of in-house development isn't all that impressive and suggests promised growth may have to come from the checkbook (M&A). What's more, it's an open question as to whether the company can deliver sustained profitable growth. If things work out well, this stock could trade more than 30% above today's level, but execution risk is a serious issue with this stock.

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Software AG - All The Buzz, But Can It Deliver The Honey?

Investopedia: Paychex Still Muddling Through

It has been about a year since I last wrote on Paychex (Nasdaq:PAYX). Back in 2012, I suggested that the Fed's actions to stimulate the economy weren't going to have a tremendous impact on employment, nor lead to a big turnaround in Paychex's fortunes. A year later that prediction seems to have worked out, as the company continues to muddle through a weak payroll growth environment in its core small/medium-sized business (SMB) market. While efforts to build up the HR services side of the business should pay off, and payroll will recover at some point, it still would seem that the Street is much too willing to price a strong recovery into these shares.

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http://www.investopedia.com/stock-analysis/062713/paychex-still-muddling-through-payx-intu-orcl-sap.aspx

Investopedia: Progress Software Showing Signs Of Life In A Tough Market

More than a year into large-scale efforts to reshape the organization, Progress Software (Nasdaq:PRGS) is hinting that its transition toward faster-growing markets could pay off. The company still has much to prove, and I would not ignore the risk of competition from large, entrenched rivals like IBM (NYSE:IBM), Oracle (Nasdaq:ORCL), and Microsoft (Nasdaq:MSFT), nor smaller rivals like TIBCO (Nasdaq: TIBX) and Software AG (Nasdaq:STWRY). At the same time, the company's significant cash balance, cash generating capabilities, and large maintenance revenue base all provide more than the normal margin of breathing room to execute this transformation.

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Investopedia: Is It Oracle, Or Is It The Market?

To take an old cliché of the stock market and twist it around a bit, when a small tech company misses the quarter the question is “what is wrong with the company?”). But when a company like IBM (NYSE: IBM (or, in this case, Oracle (Nasdaq:ORCL)) misses, the question can quickly turn to “what is wrong with the market?”

Taken in total with the results recently reported by Red Hat (NYSE:RHT) and TIBCO (Nasdaq:TIBX), I think it's fair to say that the enterprise and government IT markets are still pretty challenging, but that Oracle in particular also continues to see increasingly aggressive competition not from established rivals like IBM and SAP (NYSE:SAP), but also from newcomers (relatively speaking) like Workday (Nasdaq:WDAY) and Salesforce.com (NYSE:CRM). Even so, I think even relatively modest forecasts for Oracle continue to point to a meaningfully undervalued stock.

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Seeking Alpha: Tangoe Doesn't Look Like A Must-Own SaaS Stock

Whenever there's a new sector or market within technology creating a buzz, companies come out of the woodwork to attach themselves to the excitement. I fear that may be the case with Tangoe (TNGO). While there could be a real market, and a real opportunity, for enterprise telecom expense management (TEM), I'm not sure that Tangoe's approach is really software-as-a-service (SAAS) as opposed to more traditional business process outsourcing (BPO). With what looks like a potentially limited addressable market and some questions about long-term margins, Tangoe's value proposition just doesn't entice me to take the plunge with my own money.

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Tangoe Doesn't Look Like A Must-Own SaaS Stock

Investopedia: With Sluggish Windows Uptake, What Propels Microsoft?

Forget about the copious amounts of cash flow that Microsoft (Nasdaq:MSFT) generates. With Windows and Office still responsible for the lion's share of the company's profitability, sales trends there drive the bus. Although Microsoft continues to look too cheap, Windows 8 adoption hasn't been great, and the stock may struggle to go anywhere fast in the meantime.

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http://www.investopedia.com/stock-analysis/2013/With-Sluggish-Windows-Uptake-What-Propels-Microsoft-MSFT-ORCL-IBM-AAPL0129.aspx

Investopedia: Salesforce.com Still Seeing Good Growth, Weak Margin Leverage

As is so often the case with popular growth stocks that sport rich valuations and purport to shake up an industry, Salesforce.com (NYSE:CRM) generates plenty of controversy. While the company continues to generate respectable free cash flow (FCF), skeptics question whether the company can grow enough to support its valuation and start posting real operating leverage. I do believe that software as a service (SaaS) really is a big shift in the enterprise software sector, but I continue to struggle to see how Salesforce.com can grow enough to validate its valuation.

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http://www.investopedia.com/stock-analysis/2012/Salesforce.com-Still-Seeing-Good-Growth-Weak-Margin-Leverage-CRM-LOGM-ORCL-ELLI1122.aspx

Investopedia: For Oracle, Mixed Progress Is Still Progress

The stock of enterprise software giant Oracle (Nasdaq:ORCL) has certainly come alive this summer, but there's more than a little skepticism about the health and durability of the company's growth. While bulls think that engineered systems and Fusion applications will reignite (or at least maintain) growth, skeptics point to Oracle's soft organic growth and threats to its basic enterprise business model. The stock seems undervalued on a cash flow basis, though, and double-digit license growth should tip the balance to the bull camp in the short term.

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Investopedia: NetSuite's Valuation Leaves No Room For Error

Robust valuations are nothing new in the cloud/SaaS space, but NetSuite (NYSE:N) looks premium-priced, even by those lofty standards. Although this company certainly is posting strong billings growth today and free cash flow is ramping up nicely, it's hard to see how the industry can support the growth expectations for all of its members and I don't know that NetSuite's rampant success is as certain as the valuation would suggest.

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Investopedia: NetSuite's Valuation Leaves No Room For Error

Robust valuations are nothing new in the cloud/SaaS space, but NetSuite (NYSE:N) looks premium-priced, even by those lofty standards. Although this company certainly is posting strong billings growth today and free cash flow is ramping up nicely, it's hard to see how the industry can support the growth expectations for all of its members and I don't know that NetSuite's rampant success is as certain as the valuation would suggest.

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Investopedia: IBM Follows SAP And Oracle Deeper Into The Cloud

There's a cottage industry in connecting the dots of prior mergers and acquisitions (M&A) transactions and figuring out who might be next. When SAP (NYSE:SAP) paid $3.5 billion for SuccessFactors and Oracle (Nasdaq:ORCL) paid $1.9 billion for Taleo, it didn't take a leap of inspiration to connect the dots and posit that Kenexa (NYSE:KNXA) could be next to go or that IBM (NYSE:IBM) was the likeliest buyer on the board. With Kenexa's stock showing a lot of strength recently, Monday's announcement that IBM will acquire the company in a $1.3 billion all-cash deal is not really the most surprising announcement of recent weeks.

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Investopedia: Can Salesforce.com Defy Gravity Forever?

Arguing about the valuation and underlying fundamental quality of hot growth stocks is a lot like fighting the tides. While the market has shown time and time again that cash flow and valuation are ultimately all that matter, it can take a painfully long time for reality to supplant hope and hype. So although I fully expect Salesforce.com (NYSE:CRM) to post gaudy growth for some time to come, the underlying thesis and valuation still just don't work for me as an investor.

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http://stocks.investopedia.com/stock-analysis/2012/Can-Salesforce.com-Defy-Gravity-Forever-CRM-ORCL-IBM-SAP0825.aspx

Investopedia: Oracle Brings The Good News A Little Early

Amidst some worries about earnings performance and rumors of a management shake-up, Oracle (Nasdaq:ORCL) decided to move up its earnings announcement and the company delivered a positive earnings surprise Monday night. While it continues to struggle in hardware, the software business is growing nicely and Oracle remains an apparently undervalued major tech stock.

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Investopedia: NICE Systems Looks Like A Big Data Bargain

Analytics is an under-appreciated component of Big Data, but one that companies like IBM (NYSE:IBM) and SAS have targeted as key growth areas. Although Israel's NICE Systems (Nasdaq:NICE) is perhaps better known for its surveillance and security applications, enterprise interaction and transaction analysis looks like an increasingly valuable addressable market for the company.

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http://stocks.investopedia.com/stock-analysis/2012/NICE-Systems-Looks-Like-A-Big-Data-Bargain-NICE-VRNT-IBM-ORCL0511.aspx