February 2, 2011 / 9:31 PM / 7 years ago

UPDATE 2-Open Text to buy MetaStorm, posts stronger results

* Agrees tp pay $182 mln to acquire Metastorm

* Purchase to aid position in mobile computing

* Adjusted EPS of $1.21 vs Street view of $1.07

* Revenue of $267.5 mln vs Street view $254.4 mln (Adds analyst comment, conference call, detail; in U.S. dollars unless noted)

By Alastair Sharp

TORONTO, Feb 2 (Reuters) - Open Text OTC.TO(OTEX.O), a Canadian business software maker, posted stronger-than-expected results on Wednesday on a rebound in licensing sales, and said it would buy a smaller competitor to bolster its mobile credentials.

The Waterloo, Ontario-based company, which runs corporate data systems, said it planned to pay $182 million in cash to acquire Metastorm in a deal due to close by the end of March.

Open Text’s chief executive, John Shackleton, told analysts on a conference call the Metastorm buy would position it well as companies increasingly look to give mobile employees access to information on smartphones and tablet computers such as Apple’s (AAPL.O) iPad.

“With mobile computing, we see workflow being the glue that will allow people using their iPads or smarpthones to be able to access corporate data on the road,” he said.

Open Text has the second-largest share of the market for enterprise content management systems after IBM Corp (IBM.N). Its partners include tech infrastructure vendors SAP AG (SAPG.DE), Microsoft Corp (MSFT.O) and Oracle Corp ORCL.O.

IBM is also refreshing its software lineup as it aims to harness the mobility and collaboration possible with new devices and cloud-computing infrastructure. [ID:nN30168392]

Open Text is “one of the best acquirers in the technology space,” said Brian Freed from Wunderlich Securities. Metastorm “is a good fit. It’ll drive business intelligence for the data they’re already managing.”

Open Text said in October it would pay $71 million to buy document management software company StreamServe.


Open Text’s adjusted net income jumped 41 percent to $70.5 million, or $1.21 a share, on revenue of $267.5 million in its second quarter ended Dec. 31, the company said in a statement.

Analysts, on average, had expected Open Text to earn $1.07 per share on an adjusted basis, on revenue of $254.4 million, according to Thomson Reuters I/B/E/S.

The company made $79.2 million from licensing — a measure of future demand — compared with $42.6 million in the prior quarter and up 9 percent from the same period a year ago.

Executives had blamed the dip last quarter on a slowdown in European IT spending. [ID:nN27142091]

Open Text’s Shackleton said he was confident the company was on track to meet its targets for the fiscal year.

“The pipeline has been building nicely in Europe. We feel it is much more predictable and we don’t see another lag,” he said.

The company said it had six $1-million-plus transactions in the quarter including in the public sector, financial services, high-tech manufacturing and the petrochemical industry.

Purchasers included Saudi petrochemical producer SABIC 2010.SE and UK utility company Scottish & Southern Energy (SSE.L), the company said. (Editing by Frank McGurty)

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