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3/10/2010
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CA To Buy Nimsoft For $350 Million

Acquisition of the system monitoring firm is a move toward growing CA's customer base in the cloud and managed service provider space.

In a continued push to renew itself, CA has announced plans to acquire Nimsoft, a privately held supplier of system monitoring to startups, managed service providers and cloud computing, for $350 million.

Nimsoft has developed monitoring capabilities for such online systems as Google Apps for Business, Salesforce.com CRM, the Rackspace Cloud, and Amazon Web Services' EC2 cloud infrastructure services. In addition, Nimsoft can monitor the availability of internal databases, applications, and physical and virtual servers.

CA's chief executive officer, Bill McCracken, said Wednesday in a teleconference announcing the deal, "Nimsoft has been extremely successful in going after and getting customers" in the cloud and managed service provider space."

Nimsoft will enable CA "to reach new customers, ones frankly that we haven't been able to develop well over a couple of tries in the past," he added in response to questions.

CA recently added a new business unit, Cloud Products and Solutions, under its former mainframe senior VP, Chris O'Malley, now executive VP of the business unit. Nimsoft marks its fifth acquisition in 10 months.

CA purchased data center automation supplier Cassatt last June, network service level monitoring provider NetQoS in November; and IT service level management supplier Oblicore in January; and it announced plans to acquire virtual appliance builder 3Tera in February.

Through the Nimsoft product line, which will remain as stand-alone products, CA plans to reach managed service providers and emerging enterprises. CA defines an emerging enterprise as one with $300 million to $2 billion in revenues.

About a quarter of IT spending on software will be done by companies of that size by 2013, CA expects. The company has traditionally sold to the largest enterprises. In addition, CA believes Nimsoft will give it entrée to companies in the rapidly growing BRIC economies, Brazil, Russian, India and China.

Nimsoft sells annual subscriptions for its products, and that pricing model will continue, said Nimsoft President and CEO, Gary Read, who will become a CA senior VP and general manager of the CA Nimsoft business unit. Most existing Nimsoft employees will be added to CA, he added.

"The market was moving so fast we were concerned that Nimsoft, by itself, couldn't keep up," Read said in the teleconference.

CA CFO Nancy Cooper said Nimsoft was cash flow positive in each quarter of calendar 2009. CA is about to close out its fiscal year and plans to conclude the deal for Nimsoft before it does so March 31.

The purchase will be financed by cash on hand, CA said. The acquisition is expected to have a dilutive effect on earnings amounting to $.10 per share in the upcoming fiscal 2011, but will accelerate its revenue growth in 2012 and maintain a break even impact on earnings.

Nimsoft was established in 1998 and has 800 customers, including almost 300 managed service providers. Its customers are located primarily in the U.S. and Europe.

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