Why to Buy Comvault Systems Stock

CommVault Systems Inc.(CVLT) is a data management company. It develops and distributes Simpana® software and other systems for data protection, information governance, and discovery. In effect, it provides insurance to customers against losing stored data. Its software provides easy-to-apply information backup, archive, and reduplication to meet business needs as well as regulatory requirements.

Simpana 9® is a unified platform with customizable modules that all share the same code and function set. This unity reduces downtime and increases the security of companies with sophisticated computing needs. CommVault’s SnapProtect™ data security product also emphasizes ease of use. CommVault helps clients with managing data in physical, virtual, and cloud storage as well.

CommVault customers include Adobe Systems (ADBE), Levi Strauss (LEVI), Raymond James (RJF), and BT (BT). The company also supplies software to educational institutions like the University of Rochester and to what it describes as “a large government agency,” according to the company website, to assist in data security, management, and retrieval as well as data indexing and search.

CommVault marketed the Galaxy Express data protection software suite in partnership with Dell(DELL). It has also formed a strategic partnership with Fujitsu(6702.T).

The company is growing fast-in fact its website describes it as the world’s fastest growing data storage software company. That and its moderate size makes it look like a takeover target.

Hewlett-Packard Co. (HPQ), IBM Corp.(IBM), and Dell(DELL) each acquired a somewhat similar data management company in 2011. However, Chairman and CEO Bob Hammer told Reuters in February 2012 that the company intends to remain independent. “Whatever happens on the M&A side, our mission is clear-create shareholder value on our own as an independent company.”

Yet retaining its independence leaves the company competing with well-heeled competitors sheltered within companies like Hewlett-Packard and IBM. So far though, CommVault is competing brilliantly. In a tougher environment, however, the company is not as big a gun as some, and its smart management must know it.

At the Q3 Earnings Conference Call on February 1, 2012, the company reported growing earnings. When an analyst asked if the company was comfortable with street estimates of 30 percent growth in the first 9 months of the fiscal year and 17 percent in the fourth quarter, Mr. Hammer replied that he was.

During the Q&A period, in answer to a question about maintaining the company’s good results, Chairman, President, and CEO Bob Hammer explained “Bob [Bunte] and the team have done an awesome job here of accelerating innovation…on a relative basis our pipeline of innovation is up substantially.” Mr. Bunt, COO of CommVault, added, “We’re cranking up our investments here on R&D.” Successors to Simpana9 are already in development.

CommVault might be an excellent fit within a company like Symantec (SYMC), IBM, or EMC Corp (EMC). Any of these larger companies could offer additional resources and clout to fast-growing mid-size CVLT. On the other hand, CommVault may stay independent. Either way, the company, and its shareholders, are likely to prosper.