OpenText: When the Roll Up Stops Rolling
May 2, 2012
This item caught my attention:
Open Text (NASDAQ: OTEX) was downgraded by analysts at RBC Capital from an “outperform” rating to a “sector perform” rating.
OpenText owns a number of search and content processing technologies. Among the search systems which the company has acquired over the years are:
- BASIS. Yes, the Information Dimension data management tool has a search engine. We used BASIS for work at Bell Labs, later Bell Communications Research, in the post Judge Green era. As far as I know, the BASIS engine is still available. Our version ran on the IBM MVS/TSO system. Worked fine and we loved those “GO” commands.
- BRS Search (Bibliographic Retrieval System). Another golden oldie, this search system was, in my recollection, similar to the IBM Stairs III system. Yep, BRS is a mainframe application.
- Fulcrum, originally a Microsoft centric system, Fulcrum as a brand has largely disappeared. The technology lives on within some OpenText products. My notes point to Hummingbird, but I am not sure if this Canadian developed search engine is still chugging along.
- Nstein. This is a content processing subsystem. I used to have a write up, but after a flubbed meeting with me in London two years ago, I stopped information collection about this system.
- SGML search. Once this system was the guts of OpenText, which was founded by Tim Bray, who is now a Googler. I wondered why the SGML engine was not leveraged, but with OpenText’s shift to selling services, I lost track of what was a segment leading technology more than a decade ago.
A year or so ago, we were doing some troubleshooting of a RedDot system (another OpenText acquisition). The native search system for RedDot was Autonomy. We found this interesting.
OpenText implemented, in my opinion, a strategy similar to that used by Autonomy. As you know, Autonomy was acquired by Hewlett Packard for about $10 billion, give or take a billion. OpenText remains a public company. The downgrade may suggest that the roll up strategy is losing or has lost momentum. Will OpenText downshift and burn rubber in the coming quarters? I don’t know. This will be an interesting case to follow. I know that some observers in Canada and various stakeholders will be watching OpenText’s performance numbers.
We have been monitoring a general slowdown in the traditional search, content processing, and taxonomy sector. One hopes revenues will perk up in the second half of 2012.
Stephen E Arnold, May 2, 2012
Sponsored by Ikanow
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