Business Objects (BOBJ) today announced 3Q07 financial results that were in-line with the company’s pre-announcement on October 7th, the same day the Business Objects announced its acquisition by SAP.
In terms of valuation, I’m impressed that Business Objects was able to get a 20%ish premium over its recent (pre-acquisition) stock price, given that the company was announcing a shortfall that, in theory, should have caused a 20% stock price drop. That is, in theory, offering yesterday’s stock price on the day of pre-announcement is roughly equivalent to offering a 20% premium. What Business Objects got, by my back-of-the-envelope analysis, is closer to a 40% premium. Bien fait.
One thing caught my eye today in reading Pat Walraven’s (JMP Securities) coverage of BOBJ’s third quarter. See this sentence from his report entitled Business Objects: Expecting License Revenue to Fall Off (or from the company’s earnings release).
Cartesis S.A. and Inxight Software contributed approximately $21 million in total revenues.
Wait a minute, I thought. $21M strikes me as low.
Business Objects paid $76M for Inxight, which I’m guessing was 3x $25M in TTM revenues. Business Objects paid ~$300M for Cartesis, which was 2.4x $125M in revenues, as mentioned in the boilerplate of the acquisition press release. So whats $150M divided by 4? $37.5M.
So normally, I’d have guessed that Inxight and Cartesis together would have provided $37.5M in revenues — not $21M — and that’s not accounting for any growth. Not sure if anyone else caught this, and / or if they have a good explanation, but to me $21M seems light given the revenue histories and prices paid.