Magic Software Shoots Skyward Again in Q4

February 14, 2011 Timothy Prickett Morgan

IBM i development tool maker Magic Software Enterprises has turned in another explosively growing quarter, finishing out a year that saw the company acquired, focused, and growing smartly.

In the fourth quarter of 2010 ended in December, Magic Software’s revenues shot up 72.8 percent, to just over $25 million. And if you ignore a one-time capital gain of $2 million from last year’s fourth quarter, when Magic Software sold its headquarters building, then net income from the company’s core operations more than doubled, to $3.08 million. Including the sale of the HQ building, which is what you have to do when reporting GAAP financials, Magic Software’s net income fell by 11.2 percent.

For the full year, Magic Software pushed $88.6 million in products and services, helping by its expanding network of resellers no doubt. Net income for the 2010 year was $9.4 million, up 51.8 percent from 2009.

Last year, Asseco Group, the Polish holding company that is traded on the Warsaw Stock Exchange that took control of Magic Software. The company’s former chief financial officer and current chairman, Guy Bernstein, is still its acting chief executive officer and it doesn’t look like the software tool maker for the IBM i platform is in any hurry to find a replacement for Eitan Naor, who was hired in 2007 and dismissed less than a year later.

“2010 has been a strong year for Magic Software, Bernstein said in a statement accompanying the financial results. “We demonstrated excellent performance throughout all of our regions and major businesses, resulting in impressive double-digit growth at the top and bottom lines. Our strong financial position, coupled with our 2010 activities in promoting and growing new markets, will continue the company’s momentum into 2011, where we see opportunity to expand both organically and through acquisitions. We stand ready to meet an increase in demand for our products, especially in the rapidly evolving arenas of mobile and cloud computing solutions.”

Magic Software can indeed make some acquisitions, with $46.5 million in cash and investments on hand. Then again, with numbers growing like this, it could turn out that someone gives Asseco Group an offer they can’t pass up to sell Magic Software.