Open Text ECM
Yet to be acquired Enterprise CMS vendor Open Text (OTEX) has swung from the red to the black with strong 3rd quarter results, and all the while still digesting its US$ 489 million acquisition of previous ECM rival, Hummingbird Ltd, being listed as a leader in Gartner's ECM magic quadrant, and laying off about 15% or more than 500 employees from the combined Open Text/Hummingbird workforce.Open Text said it earned $7.3 million, or 15 cents a share, for the three months ended September 30th. As compared to a loss of $12.9 million, or 27 cents per share, in the same period a year earlier. Total revenue for the first quarter was $101.2 million, compared to $92.6 million for the same period in the prior fiscal year. License revenue in the first quarter was $28.8 million, compared to $24.9 million in the first quarter of the prior fiscal year. Open Text's adjusted earnings per share of 24 cents agreed with analyst expectations and its own forecasts. The number was up from 13 cents per share a year earlier. "We saw significant growth while maintaining our profitability targets," chief executive John Shackleton said during a conference call with analysts. One of the company's big wins in the recent quarter was a US$ 2.4 million sale to the American government's FBI domestic spying and law enforcement agency. Integration of the Hummingbird corp structures and operations continues, but the company claims that the majority of Hummingbird’s integration will be completed during the second quarter of fiscal 2007, which ends on December 31st. As part of the integration, Open Text has announced reductions in the global workforce of 3,500 by approximately 15 percent. About 60 percent of these reductions have been completed already and the remainder are expected to be completed by the end of this month. Open Text is also reducing 38 facilities by closing or consolidating offices in certain locations. In other bright news for the ECM vendor, analyst firm The Gartner Group placed Open Text squarely in the "Leaders" group of its ECM Magic Quadrant for 2006. Gartner notes that through broad acquisition activity Open Text has embarked on a strategy to become the leading pure-play Enterprise Content Management provider, and is executing and articulating this vision rather well. Analysts also point out significant challenges for the firm in the areas of workflow capabilities, a lack of vertical expertise in critical industries, and significant competition from IBM, EMC, Microsoft, and potentially SAP. The ECM acquisitions kitchen has been a hot one lately with the most recent activities including Oracle's US$ 450 million purchase of Stellent and IBM's massive US $1.6 billion acquisition of FileNet. Once Open Text completes integration of its many recent acquisitions, it too may be a handsome target. Though with a market cap at nearly a billion US, the list of suitors will not be a long one.