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Hyperion's Upstream Purchase For Quality

Hyperion Solutions agreed to purchase partner Upstream Software, a Rochester, Mich.-based maker of workflow software to track the movement of financial information from sources to reports.

Financial terms were not disclosed.

Hyperion, which Thursday announced sub-par third-quarter earnings, said in a statement that finance leaders at hundreds of businesses use Upstream's WebLink DM to improve and maintain the quality and accuracy of data.

Thanks to the companies' four-year-old partnership, Hyperion customers such as Honeywell, Primedia and Unisys already use Upstream's software for data collection and transformation, internal control and audit trails.

Pristine data is important at a time when corporate compliance rules such as Sarbanes-Oxley or SEC 17a-4 loom over every step of the data and information management and storage process.

Businesses need their data to be unaltered in the event they get audited by a government agency.

"With a lack of confidence in financial data leading to increased business risk, solving the financial data quality problem is a top enterprise priority," Hyperion said in a statement.

Moreover, financial data quality management is a key part of a burgeoning enterprise: Forrester Research said the overall data-quality market will be a $407 million market in 2006 and grow 17 percent per year.

Hyperion's move comes as other business intelligence and corporate performance software providers like Cognos and Business Objects are plugging their suites with new functionality to outdo the competition.

Earlier this week, Cognos announced that its Go! Search software would support Google's OneBox and IBM's OmniFind enterprise search products.

In buying Upstream, Hyperion could use a jolt in the wake of substandard license revenue earnings.

Despite reporting third-quarter in-line sales of $185.6 million, the company's license revenue of $64.4 million was far short of consensus expectations for a number in the mid-70s, according to researcher SG Cowen.

"We believe this license shortfall in the midst of a product cycle is primarily due to poor sales execution, although seasonally soft 1Q spending likely exacerbated the magnitude of the miss," the company said in a research note Friday.

"The June quarter is Q4 for HYSL, which is typically strong, but we continue to advise investors to remain on the sidelines until we get more confidence in the company's ability to execute."

SG Cowen, which issued a "neutral" rating on the software maker, also said Hyperion is a likely target for acquisition thanks to its "war chest" of $446 million in cash.