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Compuware Buys App Performance Management Provider

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Compuware headquarters in downtown Detroit

Compuware headquarters in downtown Detroit

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Compuware Corp. has made another software acquisition.

The Detroit-based software and IT services provider (Nasdaq: CPWR), Michigan’s biggest tech company, will get bigger with the purchase of Waltham, Mass.-based dynaTrace Software Inc.

The purchase price was $256 million. The cash acquisition closed July 1.

Founded in Linz, Austria in 2005, dynaTrace employs 180 people around the world. Compuware said that “substantially all” of those employees, including the dynaTrace leadership team, are expected to remain with the company under Compuware ownership.

Compuware said dynaTrace had revenue of $26 million over the past 12 months, and is expected to add $35 million to $45 million to revenue in Compuware’s current fiscal year, which started April 1. Compuware said it plans to grow dynaTrace into a $100 million-a-year business by next fiscal year.

However, the purchase price paid is also expected to cut 3 cents a share from Compuware’s earnings in the current fiscal year. But by next fiscal year, Compuware said it expected dynaTrace to add 4 cents a share to the bottom line.

DynaTrace software, called PurePath, monitors and optimizes the performance of software applications. Nearly two years ago, Compuware purchased another application performance management software provider, Gomez — and that acquisition has paid big dividends for Compuware.

“Organizations today depend on the rapid development and delivery of high-performing applications to drive revenues, customer satisfaction and brand,” said Compuware CEO Bob Paul. “To meet these demands effectively, IT organizations must have visibility into the performance of every transaction, from development, through test and in production. Together, Compuware and dynaTrace APM solutions allow IT to meet business demands for performance and agility through unbeatable insight into the user experience – whether in cloud, complex or traditional environments.”

Added dynaTrace CEO John Van Siclen: “The APM market is undergoing a transformation —  old tools simply can’t meet the competitive requirements of modern applications. Compuware sees the same market shift and is committed to building next-generation APM solutions that bring customers greater value, with less effort, faster than ever before. We’re excited to be a part of the Compuware team, which will allow us to meet and increase the skyrocketing demand for dynaTrace solutions.”

In a conference call, Compuware officials said dynaTrace gives them new capabilities in application performance testing that extends all the way back to software development and testing. DynaTrace also offers a “richer feature set” than Compuware’s legacy Vantage offering in testing application performance within the corporate network, according to Steve Tack, CTO of Compuware’s application performance management businesss. He said the acquisition is a “real game changer” for application performance management, with one offering that includes APM from software development through use on the Web, “meeting the new demands of online apps and cloud-based services.”

All told, officials said, APM is a $6 billion a year market.

Hundreds of companies, including Zappos, SAS, Macy’s, BBVA and Thomson Reuters rely on dynaTrace to drive better business results by optimizing performance, accelerating time-to-market for new releases, reducing application management costs, and bringing business and IT closer together. Visit dynaTrace online at www.dynatrace.com.

In the conference call, Compuware officials also said they thought the acquisition could boost sales of dynaTrace among Compuware partners.

To listen to a replay of a conference call discussing the acquisition, call (800) 475-6701 in the United States or (320) 365-3844 elsewhere, using the pass code 209173. The conference call is also archived on the investor relations page at www.compuware.com. To download the presentation used during the conference call, visit www.compuware.com/dynatrace.

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