After a tumultuous year, i2 Technologies is primed for a significant event.  For all the drama of the past 24 months of i2 Technologies™ history, the next 12 months may prove even more exciting.  While its MGI Index (MGI-X) and MGI Change Vector (MGI-CV) scores remain unimpressive and the first quarter results failed to stop the erosion of the business, the path to selling the business has never been so clear, and the list of potential suitors says as much about the supply chain and logistics software sector as it does about i2. In spite of its broken deal with JDA Software (NASDAQ: JDAS; MGI-X: 918), we see an increasing probability of an exit transaction for ITWO in the 2009 to early 2010 timeframe.

Can the Tech Rally Last?

At a macro level we continue to see a sharp mismatch between market optimism and fundamental MGI data. We have over 100 data points from the December ’08 quarter and a growing number of results from the March ’09 quarter. Although the March scores are not all in, the tone is decidedly negative and in sharp contrast with investor and news media optimism. While the stock market is a discounting mechanism that tends to believe that it is looking forward, the question arises as to whether or not tech companies can demonstrate real operating adaptability and improvement in the new conditions, - at least till later in ’09 when earnings comparisons get easier.

Engineering Design Software sector companies generally exhibit poor MGI Index scores. This is an undermanaged sector that is ripe for consolidation. This score summary covers companies Mentor Graphics, Synopsys, Autodesk, Parametric Technology and Cadence.

Summary review of MGI Index scores of key e-Learning companies and outlook. Companies mentioned Skillsoft, Plato, Sum Total and others.

Oracle's acquisition of Sun (Nasdaq: JAVA) comes at a tactical price but carries with it major strategic benefits to Oracle as it stands to reap benefits of a more vertically integrated stack. The accretive nature of Oracle's bid for Sun is underscored by the efficiency of Oracle's business model. When Oracle completes this deal, it will be strategically positioned vis a vis both IBM and HP, and will be able to compete more effectively for centrally controlled IT budgets. This transaction puts significant distance between Oracle and SAP, as Oracle will no longer be just a software company. To see the full content of this Research Note, please CLICK HERE.

We attended InfoWorld's 6th annual OSBC event in San Francisco, where the open source community convenes in a business setting.  The major theme was the attraction of open source products' low cost during a period of IT budget contractions.  Our major interest was to measure the relative success of open source companies in reaching the enterprise market and their ability to threaten the established vendors.  The short conclusion is that open source projects continue to make inroads into Silicon Valley development efforts, but as a business, open source companies have yet to prove their long-term viability with a business model capable of delivering attractive returns to investors.

27 March, 2009 - The outlook on 2009 enterprise IT spending looks grim.   The silver lining in the doom and gloom surrounding technology spending in 2009 may be found in open source technologies.  The popular business press is touting the notion that the recession could boost market share gains for open source technology companies.  To date, open source technology has not proven to be nearly as disruptive or profitable as once predicted.  Based on funding activity in 2008 and the distance open source companies have to go in reaching sustainable profitability, 2009 looks to be a make or break year for open source companies.

For 2008, MGI Research Model Portfolios have significantly outperformed major market indices and hedge fundbenchmarks. This research note reviews 2008 performance results for MGI Research Model Portfolios and provides an overview of portfolio construction methodology and assumptions.