Investopedia: HealthStream Already In The Rapids

Figure out a way to automate and simplify a mundane (and non-core) task and you have a good shot at creating a successful business. In the case of HealthStream (Nasdaq:HSTM), this small healthcare IT firm gives hospitals an option for training employees that is less costly and less cumbersome, but keeps them in compliance with an ever-changing set of rules and regulations. While HealthStream is hardly undervalued, growth investors may like what they find here.

A Good End to the Year 
HealthStream did really blow the doors off with its earnings relative to prior expectations, but it was still a strong quarter and Wall Street definitely liked what it heard. Revenue rose 24% for the quarter, with revenue from the Learning business up 31% and revenue from Research up 9% on a 15% increase in patient discharge surveys.


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Investopedia: Another Day, Another Deal For Oracle

If growth through acquisition is supposed to be bad (as some academic types suggest), Oracle (Nasdaq:ORCL) CEO Larry Ellison very clearly doesn't care. Less than half a year after the $1.5 billion acquisition of RightNow, Oracle is at it again with the acquisition of cloud-based HR specialist Taleo (Nasdaq:TLEO). 

The Deal   
Taleo certainly cut to the chase in its PR announcement (titled "Oracle Buys Taleo"). The companies have reached an agreement on a deal that will see Oracle buy Taleo for $1.9 billion in cash. That values Taleo at $46 per share, or about an 18% premium to the prior day's close.

http://stocks.investopedia.com/stock-analysis/2012/Another-Day-Another-Deal-For-Oracle-ORCL-TLEO-SFSF-SAP-KNXA0213.aspx

Investopedia: TIBCO And The GARP Paradox

Value investors, and their quasi-traitor cousins GARP investors, often find little to buy in the software space. All too often, any software company priced like a bargain is likely to struggle to grow much (and will likely underperform the estimates that make it look cheap) or get much love from the typical tech investor crowd. That makes TIBCO (Nasdaq:TIBX) an intriguing but risky idea. While this company's valuation and their position as the last small independent integration vendor are appealing, any value investor is wise to be cautious about why this software stock seems appealing. (For related reading, see Stock-Picking Strategies: Value Investing.)  

A Fine End to the Year  
Despite the disappointing Oracle (Nasdaq:ORCL) reports that spooked investors, TIBCO reported a pretty good quarter. Revenue rose 20% for the quarter and slightly beat the average estimate. Growth was a little stronger in the slightly larger service/maintenance segment (up about 22%), while the licensing line showed around 17% growth and the company boasted of 28 deals over $1M for the quarter.

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Investopedia: SAP Pays Up And Accelerates Its SaaS Development

One way or another, growth costs money. Large software companies, like Microsoft (Nasdaq: MSFT), Oracle (Nasdaq: ORCL) and International Business Machine (NYSE: IBM), spend piles of money on internal software development, but the reality is that the big boys still often have to bring out their wallets to compliment or compensate their own efforts. To that end, SAP AG (NYSE: SAP) is paying quite a lot for human resource software-as-a-service (SaaS) leader, SuccessFactors (NYSE: SFSF), but it would seem the alternative was even less appealing. (To know more about technology industry, read: A Primer On Investing In The Tech Industry. )


The Deal 
SAP announced over the weekend that it was acquiring SuccessFactors in an all-cash deal worth about $3.4 billion. SAP will pay SuccessFactors shareholders $40 a share, a 52% premium to the Dec. 2, 2011, close and near to the all-time high for the stock. SAP will initially pay for this deal with cash on hand and a loan.


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Investopedia: Oracle Expands Its Cloud Business ... RightNow

Oracle (Nasdaq:ORCL) has always been a notably acquisitive company, so it was really only a matter of time before they announced another meaningful deal. Likewise, the company is actively trying to build it out its cloud computing and software as a service (SaaS) business, and stay ahead of the likes of SAP (NYSE:SAP) and Salesforce.com (NYSE:CRM), so a deal in the SaaS space was likewise just a matter of time.


Those two timelines met on Monday morning, as Oracle announced that it had reached an agreement to acquire customer service specialist RightNow (Nasdaq:RNOW) in an all-cash deal.

The Deal
Oracle will be paying $43 per share in cash for RightNow. That works out to about a 20% premium to RightNow's prior closing price, and a total net price tag of about $1.5 billion - not exactly a huge deal for a company with $16 billion in net cash on the balance sheet, and over $5 billion of free cash flow in the last quarter. (Free cash flow is a great gauge of corporate health, but it's not immune to accounting trickery. For more, see Free Cash Flow: Free, But Not Always Easy.)


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Investopedia: Salesforce.com Offers Growth, But At A Price

The markets are in no mood these days for any shortfall in expectations. Couple that with an eye-popping valuation, and Salesforce.com (NYSE:CRM) is performing a high-wire act these days. Although the company's top-line growth seems to be good enough to pacify a twitchy Street, long-term investors may want to take note of the high cost of this software company's growth before paying such a steep entry fee. 

Fiscal Second Quarter Results Answer, and Ask Questions  
Wall Street has been quick to punish tech companies like F5 (Nasdaq:FFIV) or NetApp (Nasdaq:NTAP) on any sign of revenue trouble. Luckily, this was not an issue for Salesforce.com - the company posted 38% annual revenue growth (and 8% sequential growth) and once again topped out the high end of its expectations. Billings were up a like amount, and quite strong relative to the likes of Taleo (Nasdaq:TLEO) and SucessFactors (Nasdaq:SFSF), and the company booked several large-value deals.




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Investopedia: Signings A Small Thorn In IBM's Paw

Old-tech hasn't been getting much love lately, but this earnings cycle may help bring investors back to many of these old-school tech names. For although weak signings in the service business may send some investors to the sidelines, IBM (NYSE:IBM) reported an otherwise solid quarter and Big Blue remains a respectable less-risk play on technology. 


A Mostly Solid First Quarter
IBM reported top-line growth of 8%, adjusted down to 5% on a constant currency basis. Growth was led by the Systems and Technology business (hardware, mostly), which posted 19% growth with strong mainframe and UNIX business. Software grew 6% this time around, while the services business rose by a like amount.

IBM also delivered solid operating leverage for the first quarter, though readers should realize that there are a lot of adjustments and moving parts here and the numbers will vary from investor to investor depending upon what charges they choose to add back. Nevertheless, gross margin ticked up almost a full point, while operating margin expanded nicely as adjusted operating profits grew more than 20%.


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Investopedia: Will 2011 Be Another Wild Year In Software?

Perhaps more than any other sector in 2011, M&A played a major role in valuations and investor expectations in software in 2010. With companies increasingly comfortable with the economic recovery and their own balance sheets, and an insatiable demand from Wall Street for growth and so-called catalysts, 2011 could be yet another year of above-average M&A activities. Not only is this good news for the large investment banks that will likely win the advisory business for these deals, but software investors may benefit from the tailwind as well. 

What are some of the names that investors might want to watch in 2011?

BMC: Customers First
In broad terms, BMC Software (NYSE:BMC) helps its customers manage their IT environment - an increasingly important task as virtualization and cloud computing make what was already a complex job even more difficult. What BMC offers is a lot of what might be considered "blocking and tackling"; monitoring systems for equipment failure and allocating more servers in response to demand surges may not seem exciting, but they are important to the overall operation of a company's IT. BMC's relatively lower growth rate probably will not prompt a huge buyout valuation, but this could be a useful "back filling" acquisition for a tech company that wants a well-regarded, very sticky software provider. (For more, see The Next Cloud-Computing Takeovers.) 

Searching for Dividends 
Check Point Software (Nasdaq:CHKP) is a rather rare bird in software these days - a company with good growth prospects (analysts expect double-digit revenue growth), respectable returns on capital and a valuation that actually does not look ridiculous. As a leader in security, particularly in the firewall and VPN space, Check Point is strongest in markets that used to be hot but still remain essential and quite profitable. Accordingly, a deal for Check Point could be one of those transactions that generates little buzz for the buyer at the time of the deal, but pays dividends over time. 



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Salesforce.com And A Valuation In The Clouds

Say this much for Salesforce.com (NYSE:CRM) - they make life hard on the value crowd by posting excellent growth. With a great third quarter and organic growth that much larger companies like SAP (NYSE:SAP), Microsoft (Nasdaq:MSFT), Oracle (Nasdaq:ORCL) and IBM (NYSE:IBM) could only hope to get, Salesforce.com keeps the argument alive that it can grow into a dominant software player and grow into its rich valuation. 

The Quarter That Was
By any reasonable standard, this was a hot quarter for Salesforce.com. Reported revenue rose 30% from last year's level. Likewise, deferred revenue and billings were strong. Deferred revenue rose 27% from last year, while billings climbed 35% annually.Although not necessarily revenue metrics, the company did experience good renewals and lower churn. Looking further, the company's Chatter feature is now with 70% of its customer base in less than six months, while the Service Cloud has about 20% adoption so far. 


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