August 24, 2009 - BMC Software, Inc. (BMC-NYSE) develops software that provides system and service management solutions primarily for large enterprises in the United States and internationally. The company's Enterprise Service Management segment offers service assurance solutions that manage event management, service impact management, capacity management, and end user experience management; service automation solutions comprising server and application provisioning, the management of configuration settings and changes, and the compliance with configuration policies; service support that manages service desk, incident management, problem management, asset management, service level management, change and release management, and identity management; and BMC Atrium, which provides shared technologies that unify data and processes from disparate management tools, and assigns priorities to business services.

The company also offers consulting, implementation, integration, IT process design and re-engineering, and educational services related to its software products. It serves manufacturers, telecommunication companies, financial service providers, educational institutions, retailers, distributors, hospitals, service providers, government agencies, and channel partners, including resellers, distributors, and system integrators. The company was founded in 1980 and is headquartered in Houston, Texas.

BMC's stock has only seen a 25% bounce from the lows of March to now. Competitors like IBM and Microsoft are up 45% and 42% in the same time frame. Yet BMC is showing good results and has the backlog and long-term contracts in place to withstand any weakening in the economy. Maybe investors need to look closer at BMC and see the value.

Cisco Systems plans to install BMC's software on every server it sells, while Dell bundles the software with its own servers. A solid book of business and numerous long-term contracts provide protection against any further weakness in the economy.

The company raised guidance for per-share profits in fiscal 2010 ending March and now expects growth of 10% to 14%, vs. the 8% consensus. consensus estimate for full year earnings are $2.51, up from $2.26 in 2009 (fiscal year ended in March). Next year, look for $2.64.

One of the concerns for BMC, caused by the current recession, is the longer sales cycle. Customers are more reluctant to commit to capital expenditures with the economy still weak and often push off signing new contracts for a quarter or more. As soon as their crystal balls become clearer, look for BMC to benefit.

More numbers: Market Cap is $6.5 billion. Trailing P/E is 21 while the Forward P/E is 13.4. Price to sales is 3.41. Price to Book is 5.66. Operating margin was 26.05% for the last 12 months while Profit margin was 17%. Return on Equity was a notable 30%. Total cash is $1.21 billion. Total debt is $328 million. Cash per share is $6.58. Current ratio is 1.26. Book value per share is $6.17.

With over a billion in cash, a forward p/e of less than 14, and a return on equity of 30%, this stock should be of interest to many investors. Of course, if their outlook is for further weakening in the global economy, then they may hesitate to spend more time with BMC. But remember, it has many long-term contracts in place and a strong backlog to keep it busy for years. That should give most of them some comfort.

 Company Web site: www.bmc.com

- Ted Allrich