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Shouty investor Elliott looms over software veteran Informatica
Activists to the left, big data the right
+Comment Elliott Management, the activist investor with its hooks into EMC, appears to have settled on Informatica as its next likely target for shareholder gains glory.
It's the usual deal of building a holding (eight per cent in this case), analysing the company's business, speaking to the board, and then writing a letter to management and stockholders ("you're running the company badly", or "here's how you could do it better and give us a great profit on our stocks") in order to push through a change.
Informatica, founded in 1993, is a portfolio software products company that offers data management services including transformation, replication, event processing, quality processing, masking, exchange between businesses, messaging, integration and warehousing.
It has a customer base that has passed 5,000 and its annual revenues for full-year 2014 were $1.05bn, up 11 per cent on 2013, with profits of $114.1m.
Its shares currently trade at $42.06, up a couple of dollars since Elliott revealed its interest, and twelve months ago they were at $40.33, and at $36 two years ago. That doesn't look too miserable. So what has caught Elliott's eye?
Actually, it is a wholly miserable performance. In July 2011 the shares peaked at $60.91, then dipped and rose again to $52.90 in March 2012, slumping badly to $25.11 in December that year, and then trading in a $30 - $42 range.
There's scope there for recovered glory, either by selling off assets or selling the whole company so its strategy can be changed to one that delivers growth.
Tibco, an Informatica competitor, went private at a cost of $4.3bn in September last year. Elliott's strategy, according to various reports, is to prompt a similar private equity deal.
Elliott has rampaged around the storage industry, with hooks into Riverbed, NetApp, Blue Coat and others. It wants EMC to sell off its stake in 80 per cent-owned VMware. Riverbed was sold for $3.6bn to private equity house Thoma Bravo in December last year.
Big Data analytics using vast amounts of semi-structured and unstructured data in Hadoop-style stores is the new face of analytics, and that's where the growth is, not old school data warehousing and BI.
Informatica is in danger of being left behind as it tries to contain Hadoop within its existing offerings, saying: "Unless Hadoop is integrated with the rest of the data management infrastructure, it quickly becomes another island of data adding complexity to your enterprise IT environment."
That's not exactly a full-blooded endorsement.
Stockholders will be thinking that if Elliott pressure can get the shares to $50, they could sell and put their dollars somewhere else. Informatica has certainly underperformed and different owners and/or management could well be needed to get the stock growing again.
Informatica is caught between a wave of Big Data analytics Hadoop-style elephants trampling all over its customer base and the talons of activist investor hawks such as Elliott.
Candidly, El Reg storage desk thinks Informatica doesn't have a prayer of staying independent. ®