One notable occurrence was the rise in overall value compared to the same time period last year. In terms of growth areas within the segment, deal volume pertaining to the Healthcare IT market increased 31 percent.
As for other sectors covered in the report, Consumer Software volume remained about constant. Business Software, after rising 17 percent in Q4 , saw a 13 percent decline in transaction volume throughout the past three months. At its current price, VRNT is significantly overvalued. This assumption is unlikely but allows us to create very optimistic scenarios that demonstrate how high expectations in the current valuation are. With large competitors already providing competing services, we see an acquisition as possible only if an acquiring firm is willing to ignore prudent stewardship of capital and destroy substantial shareholder value.
We show below how expensive VRNT remains even after assuming an acquirer can achieve significant synergies. To begin, Verint Systems has liabilities of which investors may not be aware that make it more expensive than the accounting numbers suggest.
After adjusting for these liabilities we can model multiple purchase price scenarios. Even in the most optimistic of scenarios, VRNT is not worth the current share price. Figures 6 and 7 show what we think Microsoft MSFT should pay for Verint to ensure it does not destroy shareholder value.
Acquisitions completed at these prices would be truly accretive to MSFT shareholders. Investors seem to be willing to overlook competitive concerns or low profitability for an extended period of time when a firm is rapidly growing revenue. However, as noted earlier, the firm plans on hiring more personnel and must continually enhance its software solutions to remain attractive in a crowded marketplace. Since entering the customer engagement market, Verint has shown no signs of improving profitability.
When the focus does shift, we believe Verint is only one revenue miss away from seeing a significant cut to its valuation. Without consistent revenue growth, investors risk VRNT falling, steeply, to more rational levels. Over the past 12 months, thousand insider shares have been purchased and thousand have been sold for a net effect of thousand insider shares purchased. In October, the company formed a Japanese subsidiary, Kana Japan.
ERM included everything from data analysis to personalization to customer service. In October , Kana announced the release of Kana 6, which incorporated technologies acquired from Silknet. Kana 6 expanded Kana's e-mail management applications by adding more customer service capabilities for retail Web sites and e-businesses. Kana 6 included marketing and sales modules to manage product offerings to Web shoppers, giving customer service representatives access to customers' marketing preferences and history.
It also included a virtual agent that served as an onscreen customer service representative to answer customers' questions. Kana 6 also supported computer-telephony integration. At the time McCloskey resigned, Kana's workforce had grown to more than 1, employees.
In March , Kana cut its workforce across the board by 20 percent, laying off employees. Other aspects of the restructuring included focusing on an integrated ERM software solution, realigning the company's sales force, reorganizing its professional services business, and reducing its real estate commitments.
Broadbase specialized in customer analytics software, something that was missing from Kana's ERM solution. The combined companies would have some 1, customers. At the time of the announcement, both companies were experiencing financial difficulties. Kana anticipated slumping revenue, an increase in net loss per share, and a dwindling cash supply. As part of its cost-cutting efforts, Kana closed down Kana Online, the business unit that hosted its software as an application service provider ASP.
Kana completed its merger with Broadbase at the end of June In the second half of , Kana gained some support from IBM. Kana also introduced several other new products, including a new call center CRM system that it characterized as the first Web-based, multichannel Java service software. Titled Kana Service 7 EJB, the software enabled call centers to handle complex inquiries and improve their service levels.
Kana also introduced Service Analytics to measure and improve customer service operations at all customer touch-points. It was based on Broadbase technology and was integrated into Kana's other customer service applications.
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