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A number of major tech industry players, as well as private equity investors, have approached the $20 billion hedge fund that is trying to force a buyout of BMC Software to express interest in taking a piece, or all of, the company, according to a source familiar with the situation.

"The strategic buyers and private equities are raining phone calls into Houston," said the source, referring to BMC's headquarters in Texas.

The source, who spoke on condition of anonymity, declined to say specifically which companies have expressed interest in BMC, but said they are from a list that includes Dell, Cisco, Oracle, EMC, and IBM. "Dell would be a great fit," said the source. "They have a profound interest in getting more software-oriented."

Interest in BMC was sparked by a campaign by Elliott Management, which has accumulated a 6.5% equity stake in the company, to gain enough seats on BMC's board to force management to explore a sale. A proxy vote is set for July 25, at which Elliott plans to run a slate of candidates that includes several present or former tech execs against BMC's current board.

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BMC chief executive Bob Beauchamp and the board have to date rejected Elliott's call to sell or split up the company. A spokesman for BMC said Friday that the company would not comment beyond public statements it has already made to that effect.

The source said that Elliott portfolio managers believe BMC's stock, which is currently trading in the low $40 range, is undervalued and that the company was too slow to embrace the cloud and Software-as-a-Service markets. They also believe that sales force execution has been poor.

"There are a number of options that would be more attractive to shareholders than the current board continuing to run the company in the current way," said the source. Elliott believes that BMC could sell for $53 per share or more, according to the source.

BMC has made a number of acquisitions in recent years, most significantly the $800 million buyout of BladeLogic in 2008, in order to diversify its offerings, but has had trouble integrating them into a coherent whole. It pitches its Remedy helpdesk, Patrol network management, and BladeLogic server automation tools as a suite, but the message hasn't always resonated with customers.

"When software companies go from selling into the department level to the CIO level, they tend to stumble through that," said Yun Kim, an analyst who covers BMC for investment bank ThinkEquity. "Often the deal size gets too big," said Kim, who has a Hold rating on BMC's stock.

BMC's net earnings fell 12.1%, to $401 million, in its most recent fiscal year, despite the fact that revenue increased 5.2%, to $2.17 billion.

The earnings fall off is one reason why BMC is in play. The source noted that Dell earlier this year hired John Swainson, former CEO of BMC rival CA, to build its software business. "BMC would give Dell a ton of software and tools they could bundle with hardware and services," said the source. A Dell spokesman declined to comment.

BMC also could be a fit for Oracle, which lacks a strong portfolio of management tools to complement its database and ERP and server products, and for Cisco, which has been moving beyond its networking roots into the server business.

But not everyone believes a sale is imminent. ThinkEquity's Kim said hardware companies like Dell are usually reluctant to purchase software companies that derive most of their sales from long-term maintenance contracts, because they cannot recognize revenue from such deals quickly enough. BMC attributes about one-third of its revenue to mainframe software and services contracts that are typically three years or more in length.

Kim, however, said that Dell might be interested in the non-mainframe parts of BMC's business, and he agrees that Oracle also would be a logical player. "BMC is a relatively cheap stock compared to its peers, and that reflects the fact that the company has underperformed," said Kim.

BMC shares were up 1.3%, to $43.52, in light trading early Friday.

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