Dicom Group Plc – Captiva Software Corp. Introduction: Dicom Group Plc (Kofax Plc): Dicom Group Plc which is now known as Kofax Plc, Supplies, Markets and develops products and services for Electronic Data and Document Capture. They also manufacture and sell Computer Hardware and Software for Document and Content Management Systems. The company was found in the year 1985 and was taken over by Kofax Plc in the year 1999. Management: Chief Executive Officer – Reynolds C. Bish. Chief Financial Officer – James R. Arnold Jr.
Chief Technology Officer – Anthony Macciola. Business Factors: Dicom Group Plc region of business is Europe. However they also conduct Business in North America and Australia. The main Product of Business is Software and Hardware computer products. The United States of America operations generated more than 50% of the Groups Revenue in the year 2008. They follow the business strategy of Resellers and Dealer Selling. Dicom Group Plc provide a very Diverse set of products that usually covers very different markets and also different users. Risks: Dicom Group Plc operate in different markets which are subject to 3 different locations. * The diversity of the locations generate various risks such as Inflation Rate, Currency Rate Difference and Interest Rate Difference. * Every Market has their own set of Risks, Dicom Group Plc has to recognize and be aware of all the possible risks in that particular location. * The Computer and Software industry is a very fast and Competitive industry. * Continuous Research and Development of the products according to the market requirements is a must in order to remain prosperous in the industry. This results in a tremendous expenditure on Research and Development and further increases the Average Cost of Goods Sold in the market. Introduction: Captiva Software Corp (EMC Software Group): Captiva Software Corp is now a known as EMC Software Group. They deal in providing services related to Document Information Processing and Data Capturing from Hardcopy Paper into Electronic Formats. They convert all the Data into Electronic format and store it at the Company’s Storage section known as “Captiva Storage Solution and Document Management Systems”. Their area of business is throughout the world.
Management: Chief Executive Officer – Joseph M. Tucci. Chief Financial Officer / President – David I. Goulden. Vice Chairman – William J. Teuber Jr. Business Factors: Captiva Software Corp is primarily located in the United States of America however they manage to sell their products in the other parts of the world. Captiva Software Corp, uses its own Research and Development resources. They sell in the areas of Technology, Insurance, Financial Services and also Government. Spreading their area of sales helps them Hedge their risk over various lines of Business.
Risks: * Implementing an In house Research and Development center costs tremendous amount of resources which leads to Explicit Budget Requirements. * Though Captiva is primarily located in the United States of America, they also sell their Services in other parts of the world, which leads them to a risk of Foreign Exchange Risk, Inflation and Interest Rate risk. * 39% of the sales at Captiva Software Plc is through Resellers, which means a conflict with the Resellers would result in a tremendous drop in the Sales of the Services. Maintaining best relationships with the Resellers is a very Important factor for Captiva Software Plc. Differences in the Accounting Policies: * Dicom Group Plc follow the United Kingdom Accounting Standards. * Captiva Group Plc follow the United States of America Accounting Standards. * The main difference in the United Kingdom and United States of America Accounting standards is the treatment of Goodwill Amortization and Intangible Assets Amortization. Recommendations:
After studying the Financial Statements such as Cash Slow Statements, Income Statements, Balance Sheet and performing using Ratios such as Profitability Ratios, Working Capital Ratio and DuPont analysis (See Exhibits) of Dicom Group Plc and Captiva Software Corp, My personal recommendation to the Global Technology Fund Manager to invest in Captiva Software Corp due to various reasons. Dividends paid by both the Companys are 0 since the past 3 years. Dicom Group Plc had paid its last dividend in the year 2009, however since then it has not paid Dividends to the Shareholders.
Captiva Software deals with less risk compared to Dicom Group Plc. They provide roughly 62% of services to its Users directly compared to Dicom Group which uses various channels of Sales and Marketing. Direct Selling to the customers is one of the reasons of the Higher Margin on the Services of Captiva Software Corp. Captiva Software is primarily based in the United States of America and faces less risks of Inflation, Interest rates and Foreign Exchange Value fluctuations.
Executive Summary: Captiva Software Corp has planned to expand its business in new regions of North America. They deal with their customers directly and does not use Intermediaries for the sale of their products such as Dealers. The future prospect of Captiva Group Plc seems much more promising compared to Dicom Group Plc. Exhibit (1) Exhibit (2) Exhibit (3) Exhibit (4) Exhibit (5) Exhibit (6) Exhibit (7) Exhibit (8) Exhibit (9) Exhibit (10) Exhibit (11) Exhibit (12)