Trimble Buys Vico Assets

Trimble Navigation ( TRMB - Analyst Report ) recently announced that it has acquired assets of privately-held Vico Software, Inc. based in Colorado. The financial terms of the deal were not disclosed.

Vico offers consulting services and is a developer of 5D virtual construction software. Its software helps in synchronizing end-to-end business processes enabling all architecture, engineering and construction service providers to see the progress of construction activities and the related costs over time. Additionally, the software allows professionals to see how a design change affects project cost and schedule. It helps to save time and cost, thus improving productivity and operational efficiency.

Upon the completion of the deal, the Vico Software business will be reported within Trimble's Engineering and Construction (E&C) segment. The acquisition will enable Trimble to provide improved solutions for building construction and better deal with the increasing complexities of the evolving building information management (BIM) segment.

While Trimble has been providing effective solutions for the typical E&C markets, such as survey, heavy and highway and so forth, management has been looking for opportunities in adjacent areas that could stimulate growth. The Vico acquisition is expected to help this process. An added benefit would be the growing software content, which is a positive for margins.

Trimble is quite active on the mergers and acquisitions (M&A) front. The company’s acquisitions have helped it to build a desired portfolio, enhance its product line and increase top-line growth. Acquisitions have also been positive for gross margins, while adding operating leverage.

Trimble Navigation, Ltd. is an original equipment manufacturer (OEM) of positioning, surveying and machine control products. In the last-reported third quarter of 2012, E&C segment revenue of $287.2 million was up 1.1% sequentially and 19.0% from the comparable quarter of 2011.

Trimble has been putting in a lot of effort, disposing off non-focus areas and building a desired portfolio through successive acquisitions. The Vico acquisition is expected to further streamline construction processes, improve cost management, and hence drive revenue in this segment.

Trimble’s solid portfolio (enhanced by acquisitions), strong market position and strategic partnerships are expected to drive both revenue and earnings over the next few quarters.

However, Trimble faces stiff competition, particularly from TOPCON Corporation and Garmin Ltd. ( GRMN - Analyst Report ) .

Currently the shares of Trimble retain a Zacks #3 Rank (short-term Hold rating).