Talk of Cisco Deal Pushes Manugistics Into Spotlight

Word that little-known Manugistics (MANU Quote) is linking up with quite well-known Cisco (CSCO Quote) sent its stock soaring Monday.

Bert Hochfeld, an analyst at Josephthal, said in the firm's morning meeting Monday that Cisco would buy supply-chain software from B2B concern Manugistics. (He rates Manugistics a buy and his firm hasn't performed underwriting for the company.)

"All I did was indicate that a variety of industry sources, and a contact of mine at [competitor] i2 (ITWO Quote), said that Manugistics had been awarded the contract for supply-chain software at Cisco," said Hochfeld. "Clearly, that's greater than a $10 million deal. And obviously, it's going to lead some of Cisco's suppliers to join their exchange. It's a huge thing for these guys."

Manugistics' stock soared 29%, or 18, to 80. Before Monday, Manugistic's market cap stood at $1.7 billion. After talk about the deal with $464 billion-market-cap gorilla Cisco, Manugistics' own market cap reached $2.3 billion.

Meanwhile, it's unclear whether the deal is real. Cisco declined to comment, and Manugistics didn't return a call seeking a comment. Adding to the confusion was a news report that said Manugistics' stock climbed thanks to a deal with Deere (DE Quote). Of course, that deal was struck on Aug. 22.

Both Rockville, Md.-based Manugistics and Dallas-based i2 make supply-chain-management software, which helps manufacturers build and ship goods more efficiently.

The same thing fueling Manugistics' rise also led to i2's drop. It fell 4.5%, or 7.75, to close at 158.75. i2 is far and away the leader of supply-chain software. So if Manugistics has convinced tech bellwether Cisco that its stuff is better than i2's, the company has scored a major coup.

"For the last couple of years, i2 has owned high tech. It's like there's no one else in high tech," said Hochfeld, whose comments went out in notes from Josephthal's morning meeting. "What I said and what I will say is this makes [Manugistics] a credible alternative supplier on a go-forward basis. I would suspect they would be in a position to participate in a lot more bakeoffs that they haven't been able to until now." (Hochfeld rates i2 buy, and his firm hasn't done underwriting for the company.)

Bill Gramas, an analyst at Gruntal, said i2 is in fine shape even if Manugistics won the Cisco battle. (Gramas rates i2 outperform, and Gruntal hasn't performed underwriting for the company.)

"You know how Wall Street wants to find a 'me-too' company? This is a story where i2 is the clear leader in the space, and Wall Street is saying there must be someone else in the space that we can pile into that's cheaper," Gramas said. "In this case, it was Manugistics."

If the Cisco deal is real, Manugistics may shed that "me-too" status.