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MicroStrategy Rides 'Intelligence' Wave

Software that can pluck useful information out of the ever-growing mountains of corporate data is moving to center stage. Currently, no provider of what insiders call "business intelligence" is hotter than MicroStrategy (MSTR).

A one-time basket case, MicroStrategy has outperformed its bigger rivals -- Cognos (COGN) and Business Objects (BOBJ) -- so far this year, appreciating by a solid 21%. Shares of the McLean Va.-based company, which traded as low as $35 last summer, rose 10 cents, or 0.2%, to $63.53 on Tuesday.

Late last month, MicroStrategy shares jumped 14% after the company reported fourth-quarter net income rose 74% to $17.5 million, or $1.02 per share, vs. a profit of $4.63 million, or 33 cents a share, in the year-ago period. Revenue rose to $51.7 million from $41.97 million, well over the $45.5 million consensus of analysts polled by Thomson First Call.

Driving the growth is a combination of robust demand for so-called business intelligence products, and the company's greatly improved financial position.

Once something of an afterthought, business intelligence sales by the six major public companies this year probably will total about $2.3 billion, compared with about $2 billion last year, according to analyst Rob Tholemeier of DRW Research. The total market is probably closer to $4 billion, and is shared by large companies like database giant Oracle (ORCL - Get Report), which also sells business intelligence products, and 15 or 20 small players, he said.


Off to a Strong Start
MicroStrategy rallies in 'business intelligence' software push
Source: Baseline

The market is getting more competitive. In July, Business Objects acquired privately held Crystal Decisions in a combined cash and stock deal worth $800 million.

Oracle, in fact, underestimated the demand for business intelligence products, and will move aggressively to grow its revenue in the space, Oracle President Charles Phillips said earlier this week in a conference call with Prudential investors.

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