More on a Possible Business Objects Buy - Part II

Yet another long-winded comment from me in response to Darren Cunningham's comment to the post Is Business Objects Up for Sale? Thank you Darren for your insights.

Darren wrote:

I think a better strategy for HP would be to start with Teradata and then go with MicroStrategy. I've always thought IBM/Cognos was a better match. As for the Business Objects/SAP rumor...that would not be a lot of fun, but certainly not out of the question. The Performance Guys wrote an interesting review here

My comments on this:

I enjoyed the Performance Guys comments you referenced.

IBM acquiring Cognos (COGN) has been a recurring rumor for over a year. It makes sense for technology and business reasons. On the sales side, Cognos is much more heavily dependent on direct sales than Business Objects (BOBJ.) With IBM’s sales force and partnership network there is potentially a nice pop in Cognos sales almost immediately after being acquired -- more so than with BOBJ. On the systems integration side, IBM’s Services and partners provide a huge influx of consulting power for BI and performance management solutions with an increased emphasis on industry-oriented offerings. Again, another area where Cognos can leapfrog BOBJ.

And technically, no offense to Cognos, but its ETL product is the weak link in its offerings. Pairing it up with Ascential’s (IBM) DataStage would be terrific (as would pairing it with another world-class data integration tool?!)

HP (HPQ) acquiring Teradata? That’s interesting since HP’s CEO ran Teradata, but HP has developed Neoview, which it is deploying internally and selling to customers. That’s a big overlap.  Although Oracle (ORCL) might be fine with that type of overlap, HP may not be willing to consider it. Teradata may be a great acquisition but it may be more valuable to another high tech titan. In addition, NCR is set to spin-off Teradata on September 30^th so that complicates things in the short-term but makes it easier to acquire later.

HP acquiring MicroStrategy (MSTR)…that’s one I have been thinking about for a while. Great technology with a more reasonably (depressed?) priced stock. P/E ratio of 15, PEG 1.07, P/S 2.68, (all "better" than its main competitors), and it is 47% off its 52 week high! And with a market cap less than $1B. You don’t get the customers or company resources (sales, services or engineering) as you would if you acquired one of its bigger brethren but HP might not be interested in paying for those and would rather get the technology.

 

Comments

[Timo Elliott]

All speculation about Microstrategy as a possible acqusition target must take into account the fact that Michael Saylor has complete control over the company though his "b" shares that, if memory serves, have 10x the voting rights of the regular shares. If it were a "normal" public company, it would have been purchased a long time ago. The ball isn't in the acquirer's court, but in Mr. Saylor's -- and he's not been interested thus far...

BI Questions Blog

[Rick Sherman]

Timo,

Thanks for the information on the voting rights on Microstrategy (MSTR) shares. Maybe that explains why MSTR has not seen the stock rise that its peers have although its recent quarterly performance probably accounts for most of that. The voting rights also explains the ability to ride out the governance issues that Microstrategy been involved with over the years.

Rick

[John Bushelle]

There are many reasons you may need to know the value of your business -- if you are considering buying a business, a merger or outright sale, for tax or loan purposes, or for estate planning. Whatever the reason for needing to know this information, trying to come up with a valid figure can be a major effort and challenge.

Pricing a business too high can result in the business not being sold for a long period of time; sometimes not at all. If the business owner eventually adjusts the price to how the market is responding, the deal will often be tainted with the view that something is wrong with the business or that the owner is desperate, possibly resulting in an even lower business appraisal than it would have originally been valued at.