Online education company Blackboard Inc. last week said it will buy NTI Group Inc., a messaging technology firm, for $182 million in an effort to capitalize on tightening campus security.
NTI Group’s systems can be used to broadcast “incident notifications” such as emergency alerts to land line and cellular telephones, e-mail and personal organizers.
“There’s been some public survey work on what public institutions will be spending their dollars on in the next few years and security is at the top of the list,” said Michael Nemeroff, equity research analyst for Wedbush Morgan Securities. “Obviously, this is a response to what happened at Virginia Tech.”
On April 16, a Virginia Tech student went on a shooting rampage that killed 32 other students and faculty members on the Blacksburg campus.
D.C.-based Blackboard said it will pay $132 million in cash and $50 million in stock for NTI Group in a deal scheduled to close in the first quarter.
Blackboard’s primary focus is educational course management systems that allow students to receive assignments and course materials over the Internet as well as interact with teachers. They also allow online payment and measurement of student performance.
“This is another extension of their reach into the academic environment,” Mr. Nemeroff said. “It is diversifying their revenue.”
So far, Blackboard has mainly sold toU.S. colleges. But the company is increasingly tapping into markets for kindergarten through high school and school systems in other countries, he said.
“I think the stock is going to do well in 2008,” said Mr. Nemeroff, who upgraded his recommendation for Blackboard’s stock from “buy” to “strong buy” on Dec. 5.
Blackboard’s stock, BBB on the Nasdaq Stock Market, closed Friday at $31.96, down $2.13, or 6 percent. The stock markets were closed yesterday for the holiday.
The company said the U.S. market for incident notification would grow to $1.2 billion by 2011. Sherman Oaks, Calif.-based NTI Group’s contracts cover about 200 colleges and universities.
Blackboard and NTI Group operate with a combined client base of more than 4,900 schools and a growing presence in government organizations and corporations.
“We’re also seeing campuses use notification systems for a variety of reasons aside from security incident awareness,” said Michael L. Chasen, Blackboard’s chief executive officer. “They are using these systems for everything from weather alerts to notifying parents of absent students to alumni outreach.”
Blackboard reported net income of $3.3 million, or 11 cents per diluted share, in the third quarter, compared with a net loss of $4.8 million, or 17 cents per share, one year earlier. The company’s revenue in the third quarter jumped22 percent to $61.6 million from $50.3 million a year earlier.
The company was founded in 1997 and has more than 850 employees. The NTI Group acquisition would bring the company to about 1,000 employees.
Some analysts warned against too much optimism for Blackboard shares as competitive pressure builds and the nation’s economy slows.
The company’s shares have fallen about 27 percent in the past six months.
“We do not mean to suggest the business is in trouble or particularly challenged, merely that the company is transitioning to a new phase of growth that is likely to offer somewhat less visibility and, we think, somewhat more risk,” said Trace Urdan, research analyst for the financial firm Signal Hill Capital Group.
He also said “economic slowdown could squeeze state tax receipts and higher ed budgets as a result.”
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