It’s only natural.
With Oracle Corp.’s plan to buy San Mateo-based Siebel Systems Inc., you come to expect some talk about one of Orange County’s favorite software takeover candidates: Irvine-based Quest Software Inc.
Sure enough, just days after the Oracle news broke, Forbes writer Peter Kang penned a story about “long-term consolidation” among business software makers. His first mention is Quest. Potential suitors include Redwood City-based Oracle or Microsoft Corp., according to Kang.
Quest makes software that monitors the delivery of database information. The company’s software works with databases from Oracle, Microsoft and IBM Corp. Quest is seen as a solid performer and is a long-rumored acquisition target.
That’s despite the fact that Chief Executive Vincent “Vinny” Smith owns 34% of Quest. In the past, Smith has said he plans to keep Quest independent.
Back in 2003, Quest speculation was stirred up after Hopkinton, Mass.-based EMC Corp. bought Mountain View-based Legato Systems Inc. for $1.3 billion.
About that time, Oracle was working on the $6 billion bid for rival PeopleSoft Inc., which itself just had bought J.D. Edwards & Co. for about $1.8 billion.
Other chatter:
*About a year ago, Merrill Lynch & Co. cited Quest as a potential target for EMC, which has been boosting its software business.
*In April, a hedge fund manager brought up Quest as a potential target for Santa Clara-based Sun Microsystems Inc. in a CNN/Money column.
Quest continues to run its business,and recently got a nod from Wall Street.
Earlier this month, Credit Suisse First Boston raised its rating on Quest’s shares from “neutral” to “outperform.”
The note came after the stock slid more than 10% after Quest just missed expectations with its second-quarter report in August.
The company said sales rose 16% to $107.1 million versus a year earlier. Operating income more than tripled to $16.4 million. The income gain was aided by a $12 million increase in services revenue and the absence of a litigation charge.
Credit Suisse analyst Jason Maynard said the big drop in the stock was unwarranted.
“It is possible that some investors may have been expecting some more upside in the back-half of the year and were disappointed when management did not guide revenue and (earnings) accordingly,” Maynard said. “However in our view, we saw nothing to indicate revenue growth would decelerate, and we continue to believe that Quest will continue to steadily grow revenue and earnings throughout 2005 and 2006.”
Last week, Quest had a market value of nearly $1.5 billion.
Maynard wrote that he liked Quest’s prospects because of demand for its software, and, in a twist on the takeover speculation, for Quest’s own buys of other companies.
In May, Quest paid about $60 million for privately held Imceda Software Inc. of Massachusetts. The buy expanded Quest’s products for managing databases running under SQL, software for requesting information from a database.
In July, Quest bought Vintela Inc. of Lindon, Utah, for $56.5 million. Vintela makes software that helps Microsoft products work with the Linux operating system.
Ad Placer Gets Funding
An Irvine company that sells online paid search advertising through phone book companies raised $5 million in venture capital.
SME Global Solutions Inc. got the money from Redpoint Ventures of Silicon Valley.
SME Global started four years ago with the backing of YellowPages.com Inc. of Pasadena. Back then it helped phone book companies sell banner ads to their customers.
With the growth of search advertising, the company sees bigger prospects in helping small and midsize businesses get their names on Web search pages. The ads also are sold through phone book companies.
The company plans to use the funding to expand its business and with development costs and hiring, said David Reeve, marketing manager for SME Global.
SME employs about a dozen of its 25 people in Irvine. The company could double its staff, Reeve said.
Reeve declined to say what SME’s yearly sales are. Revenue grew 200% this year compared to 2004, he said.
Customers include Atlanta’s BellSouth Corp., San Jose-based Knight Ridder Inc., Dayton, Ohio-based Berry Co. and Denver’s Dex Media Inc.
Bragging Rights
A young Costa Mesa company came out on top at a recent venture capital meeting.
It didn’t mean any actual funding. But Costa Mesa-based Vigilistics Inc. won over a panel of venture capitalists at the VentureNet conference held at the Four Seasons Hotel Newport Beach earlier this month. The event, hosted by the Software Council of Southern California, drew some 330 venture capitalists, corporate and individual investors and industry executives.
Vigilistics claims to be the only software company that helps food plants become compliant with the Bioterrosim Act of 2002.
To do that, Vigilistics said it creates “real time” manufacturing and business process reports. More than 40,000 food plants must comply with the Food and Drug Administration rules.
