April 30, 2008 - Informatica Corp. (INFA-NASDAQ) provides enterprise data integration software that enables companies to access, integrate, and consolidate their data across a variety of systems and users. Informatica's PowerCenter platform consolidates, codes, and moves large data warehouses, and its PowerExchange software enables access to bulk or changed data. Other products include PowerAnalyzer, an application for improving data performance and efficiency, and SuperGlue, a metadata tool that creates data about data, integrating information from different databases to identify redundancies and analyze how the data is being used. Informatica's more than 2,700 customers include ABN AMRO, Avnet, and CVS.

We're also talking profits, increasing profits. The company slipped in its profitablity in 2003 to 2004 earnings per share (eps), going from 17 cents a share to 9 cents. But since then, eps have improved impressively. In 2005, eps were 37 cents, then 39 cents the next year. Last year, they hit 57 cents. This year analysts look for 60 cents and 75 cents next year. First quarter profit was recently reported, up 23% from the same quarter last year at 12 cents a share. Revenues increased by 19% to $103.7 million.

A good part of those earnings come from overseas. Almost 40% of sales are from international accounts. Recently the company announced new contracts with Asian and European customers valued at more than $300,000 per account. As those economies thrive, companies will continously upgrade their commitments to Information Technology (IT).

Many analysts believe domestic technology spending will increase next year as the U.S. economy recovers from its current problems. If true, look for American companies to upgrade their software and technology and increase spending for IT in 2009. With both the U.S. and international markets flourishing, the demand for Informatica's software and services should grow noticeably.

Recently Informatica partnered with SAP, a software leader, providing support for several new applications. With this new alliance, look for SAP to take more interest in Informatica, perhaps even buy it. SAP isn't the only possible suitor as Informatica has built a solid reputation and is increasing market share.

Some numbers: The stock hit an all-time high of $58.40 in 2000 (split adjusted pricing). It hit a low of $2.80 in 2002. Sales were $391 million in 2007. Look for $450 million this year and $500 million next. Current assets are more than 3 times current liabilites with almost $500 million in cash. Net profit margin was 14% last year. Return on Equity was 17.5% in 2007.

Informatica is worth more of investors' time if they're not risk averse. Earnings have been erratic in the past. But management seems to be on the right track now with more international sales and a new venture with SAP. There's a chance that a bid will appear for INFA. That's never a reason to buy a stock. It's the earnings that impress here, and they appear to be improving. That's what makes the stock of interest.

- Company Web site: www.informatica.com

- Ted Allrich