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BMC CEO Blasts HP Over EDS Deal

The chief executive took a dim view of HP's acquisition of EDS.
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SAN FRANCISCO - The CEO of BMC Software (BMC) on Thursday lambasted Hewlett-Packard's (HPQ) - Get HP Inc. Report buyout of a major software and hardware integrator, announced this week.

Rather than making nice with his prospective new client, BMC CEO Robert Beauchamp said during the company's fourth-quarter earnings conference call that H-P has "declared war" on the ecosystem of data-system suppliers and integrators by moving to acquire

Electronic Data Systems

(EDS)

.

With a market cap of $7 billion, business-software supplier BMC posted annual revenue of $1.73 billion for the year just ended.

"In last 24 hours,

I have spoken with very senior executives for the largest tech companies in the world who view" H-P's buyout of the consultant and systems integrator as a move toward becoming "a more hostile, less friendly partner," as H-P creates a mirror image of

IBM's

(IBM) - Get International Business Machines Corporation Report

business model, Beauchamp said.

The acquisition

poses competitive threats to many

EDS hardware and software suppliers, as well as other integrators who have not previously viewed H-P as a competitor.

EDS has historically been a good customer of BMC, which sells software tools for mainframe computers, Beauchamp said. "They'll need to maintain that relationship with us or go to IBM. We'll do a good job of being a provider of mainframe tools" to EDS going forward, he added.

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Houston, Texas-based BMC reported revenue of $466.9 million, up 11.3% from $419.4 million for the same quarter of last year. Analysts were expecting a top line of $460.3 million, according to Thomson Reuters.

Net income jumped 54.5% to $97 million, or 50 cents a share, vs. $62.8 million, or 30 cents a share, in the prior year.

Excluding special items, EPS was 63 cents. Analysts were looking for EPS of 51 cents.

Shares were up $1.59, or 4.4%, to $38.02 in recent trading.

But the company revised reported earnings for the prior three quarters, reducing reported EPS for the year just ended by 5 cents, excluding special items, and bringing full-year reported EPS to $2. The company "identified immaterial errors in its original calculation of the cumulative effect of adopting" new accounting rules, reducing retained earnings by $45.2 million during the fourth quarter to compensate for the cumulative effect of the rule change, the company stated.

Excluding items, operating margin was 29%, up 8 percentage points year over year.

Total deferred revenue at the end of the quarter was $1.78 billion, up 2.8% from $1.73 billion a year ago. Core software license bookings were up 16% year over year to $88 million, about $5 million below BMC's estimates, but still growing faster than the market, Beauchamp said.

For fiscal 2009, BMC said EPS, excluding special items, would range from $2.10 and $2.20. Analysts were looking for a top line of $1.833 billion and EPS, less items, of $2.09.

In the software sector,

Intuit

(INTU) - Get Intuit Inc. Report

will post earnings Tuesday, May 20.

Salesforce.com

(CRM) - Get salesforce.com, inc. Report

reports results Wednesday, May 21.