Interview with Mark Moerdler, Ph.D., Senior Research Analyst at Sanford C. Bernstein & Co.: Software Defined Networking is 2013 Business Software Theme to Watch

Wall Street Transcript

67 WALL STREET, New York - January 3, 2013 - The Wall Street Transcript has recently published its Business and Application Software Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Application Software Consolidation Activity - Cloud Computing and SaaS Trends - Health Care Transition to ICD-10 - Outsourcing and Offshoring Trends

Companies include: VMware, Inc. (VMW), Microsoft Corporation (MSFT), SAP AG (SAP), Hewlett-Packard Company (HPQ), Dell Inc. (DELL), CA, Inc. (CA), (CRM), Adobe Systems Inc. (ADBE), Apple Inc. (AAPL), Citrix Systems, Inc. (CTXS)

In the following excerpt from the Business and Application Software Report, an expert analyst discusses the outlook for the sector for investors:

TWST: What other new technologies or product offerings do you believe may make a splash in 2013?

Dr. Moerdler: There are obviously lots of continuing changes occurring. There are a lot of potential opportunities, the interface, interaction between hardware and software. So you see companies like VMware (VMW) has acquired Nicira, and has moved into a space called software-defined networking in order to be able to do more within the software layer and less within switching and the hardware layer.

We're going to see more of that occurring as more of the whole data center becomes virtualized, not just the server itself, but storage and the capabilities of it. I think we're going to see software as a service continue to move beyond pure employee-facing, client-facing, customer-facing SaaS-type solutions into other areas that are out there. So there are a number of those opportunities.

As mobile continues to grow and as more people have either smartphones or tablets or ultrabooks, it opens up new opportunities from an application-development point of view, because you now have a new user experience that's not just the type- but touch-enabled to more and more people. That generates a lot of opportunities for the companies.

TWST: You recently downgraded CA to "underperform." What are the factors that contributed to your rating change?

Dr. Moerdler: The rating change was driven by the fact that the company's core offerings have aged and the company has not been organically innovative to any great extent. They've been an innovation acquirer, and that's had effects on their business model. They're very much of a enterprise license-agreement business in which the combination of mainframe - which is something you basically rent for a period of time and then need to rent again in the next contract term in order to use it - traditional software with a perpetual license, but that license is ratably recognized over the contract term. So the net effect of all of that complexity is that the enterprise license agreements...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments (0)