BMC Software Inc. (BMC) is winning new customers at regular intervals. The company's superior product quality, innovative service offerings and aggressive marketing strategy are helping to win these major deals. The ongoing revival in IT spending across the globe is also a benefit.
Latest among these is a deal win from Australia's Monash University. This university has selected BMC Software's Business Service Management (BSM) platform to support its information and communication technology (ICT) services. This new platform developed jointly by Monash and BMC will manage IT services for more than 50,000 students across six Victorian campuses. Although a major deal, the company did not disclose the monetary value.
In addition, various government agencies are increasingly feeling the need for professional management of their IT infrastructure. As a result, many U.S. defense organizations have selected BMC Software Inc. for their IT service management and software, including the Air Force Services Agency, Defense Logistics Agency, Marine Corps Systems Command, U.S. Air Force, U.S. Air Force Pentagon Communications Agency, U.S. Army, U.S. Coast Guard, U.S. Department of Defense, U.S. Department of the Navy and others.
Apart from providing normal IT solutions and services, U.S. Government agencies have also chosen BMC Software for different IT initiatives, such as cloud computing, service desk consolidation and the management of hybrid IT environments.
We view these wins as significant, not only because government contracts are usually lucrative, but also because they usually span over a number of years and lend stability to the top line numbers. Moreover, new wins increase penetration at government agencies and indicate market share gains.
The company reported encouraging second quarter 2010 results, with earnings per share of 76 cents exceeding the Zacks Consensus Estimate of 60 cents per share. Revenue of $508.0 million was up 4.0% from the year-ago period. For fiscal year 2010, the company expects non-GAAP earnings per share of $2.64 to $2.72, but expects total bookings and revenue to increase in the low single digits, compared to the year-ago period.
For fiscal year 2010, the Zacks Consensus Estimate is $2.37. This is much below the company's guidance range of $2.64 to $2.72 per share, leaving some room for further upside. Analysts covering the stock have not changed their estimate in the last 30 days.
The company has witnessed an average earnings surprise of 16.25% in the last four quarters and we expect this trend to continue, as the company is venturing into new businesses and expanding its existing line of business.