BMC Software Wins Telecom Deal

Leading large enterprise software company BMC Software Inc. (BMC - Analyst Report) recently announced that the Swiss utility provider Wasserwerke Zug ("WWZ") will deploy its Remedy Service Desk solutions.

Wasserwerke Zug will integrate BMC Software's solution into its telecom business to provide improved customer support to its growing customer base in central Switzerland.

Strong customer service is a prerequisite in the intensely competitive Swiss telecom market. Wasserwerke's customer service has been hurt since its IT infrastructure reached its performance limit. Moreover, its ticketing system is also dated and has been unable to meet growing customer requirements.

BMC Software's Remedy Service Desk solution is a part of its Remedy IT Service Management Suite (ITSM). The service desk solution will boost customer retention rate by reducing complexity in delivering customer support.

With the help of the Service Desk solution, Wasserwerke Zug will be able to better handle telecom customers' queries. Efficient services from the local service centers will enable Wasserwerke to meet increasing customer demand, which will open up roads for new customers.

Apart from this, Wasserwerke will be deploying BMC Software's Business Service Management solution to assess the competitiveness of its customer relationship management application. The solution is expected to simplify the customer service operation by automating the process of diverting queries into the serviced desk for quick and efficient service.

We believe the continued success of BMC Software's ITSM solutions will bring in many new customers from the telecom sector.

Recently, BMC Software was selected by the Australian wing of mobile phone maker Motorola Inc. (MOT) for rapid deployment of its ITSM suite. Motorola integrated the solution into its service businesses to provide better and secured IT support to its growing customer base in Australia.

The steady flow of customer wins from different industrial sectors and strong bookings drove BMC Software's decent first-quarter revenue growth. The company expects total bookings and revenues in fiscal 2011 to increase in the mid single-digit range on a reported basis.

Opportunities for growth in the SaaS segment, a spate of successful government deals and strong cash generation abilities are positives for the company. However, we remain apprehensive about the challenges posed by industry leaders such as IBM (IBM - Analyst Report), Hewlett Packard Company (HPQ - Analyst Report), EMC Corporation (EMC - Analyst Report) and CA Technologies Inc. (CA - Analyst Report) owing to their strong position in the areas of cloud computing and IT solutions. BMC Software's exposure to Europe is also a cause for concern.

We maintain our long-term Neutral rating on BMC Software.

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