Why Kenexa Shares Popped
Aug 27th 2012 5:21PM
Updated Aug 27th 2012 5:28PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: Big Blue is scooping up the company, adding to its large stable of software application acquisitions made over the years. Kenexa has been putting up strong growth, with revenue jumping 24% to $88.2 million last quarter, although it remains unprofitable. The company has roughly 9,000 customers.
Now what: The move mirrors one Oracle (NAS: ORCL) made earlier this year when it scooped up HR software player Taleo, which in turn was a response to SAP's (NYS: SAP) gobbling up of SuccessFactors a few months before that. Larger enterprise-software players continue to consolidate with smaller companies as they build up an array of complementary offerings. IBM exec Steve Mills says the deal will be accretive to earnings within three years of its closing, which is expected in the fourth quarter.
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The article Why Kenexa Shares Popped originally appeared on Fool.com.Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. Motley Fool newsletter services have recommended creating a synthetic long position in IBM.
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