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Business Objects Mines Text Analytics

The business intelligence software maker's latest deal now lets it format data and mine unstructured text.

Business Objects

(BOBJ)

sees itself as the pursuer, not the pursued.

The company has fended off speculation that it would make an ideal takeover target since

Oracle

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bought its competitor

Hyperion

in March.

Business Objects' deal to buy privately held

Inxight Software

of Sunnyvale, Calif., for an undisclosed amount, announced Tuesday, comes on the heels of its acquisition of

Cartesis

, which enhanced the company's software tools for financial data.

The Inxight acquisition is expected to close in July. Financial details of the deal were not disclosed. Founded in 1997 in Xerox PARC, in Palo Alto, Inxight has 120 employees.

According to Juliette Sultan, Business Objects vice president of Information Discovery and Delivery, the lion's share of Inxight's revenue, which exceeded $25 million in 2006, comes from its Federal Systems Group, a wholly owned subsidiary with contracts at the U.S. Defense Intelligence Agency. Business Objects has dual headquarters in France and San Jose, Calif.

Enterprise software consolidation continues apace, as developers of business intelligence tools gravitate into competing camps along the great Oracle-

SAP

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divide. Business Objects remains agnostic.

But earlier this month, SAP disclosed a deal to buy

OutlookSoft

, which competes with Cartesis in financial reporting software tools.

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When asked if the company entertains acquisition offers, Sultan said that Business Objects' clients prefer to work with an independent business intelligence provider "that is here for the long term." Only by going solo can the company assure customers that it will continue to support the heterogeneity of their software environments. "So our focus as a company remains to provide them with just that," she added.

Which sounds like a nondenial denial.

"My sense is they're not looking to be bought," said Forrester Research analyst Paul Hamerman. An acquisition of Business Objects is possible. But few software and services suppliers would be interested in such a large and expensive target. Even

IBM

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, a possible suitor, probably would not attempt it, he added.

Business Objects earns revenue on licensing terms, maintenance and services. It has begun selling on-demand subscription-based software, which is still a very small part of its revenue model, Sultan said.

Shares of the company, which has a market cap of $3.88 billion, closed Tuesday down 2 cents at $39.89, nearing its 52-week high of $40.94. Midday Wednesday, shares gained 70 cents to $40.61.

Inxight's software sifts through and analyzes unstructured information from corporate databases, such as email, notes, and Web content. It was used, for example, to search Enron email messages for incriminating evidence, and according to Sultan, it also allows federal agencies to search across multiple databases for evidence of terrorist planning.

The acquisition is likely to give the company a leg up in the publishing and media market, where it has not been strong, Sultan says.

Forrester analyst Matt Brown said, "This is the first time we've seen a major business intelligence vendor" buy one of the handful of small, unstructured-text analysis providers. "Now that they're getting plucked up, it's putting them in a different position."

Other companies that compete with Inxight include

ClearForest

, privately held

Attensity

and France-based

Temis

. Media company

Reuters

(RTRSY)

took ClearForest off the table with its acquisition, announced at the end of April.

SAP, which does not have unstructured-text mining capability, could be in the market for a provider, Brown said. IBM just introduced a product offering just such text analytics.

Stellent, a content management vendor acquired in late 2006 by Oracle, has some functional overlap with Inxight's capabilities, Hamerman said.

The acquisition puts Business Objects in an "interesting position," able to both format data and mine text, Brown said.