Tibco reported disappointing Q2 earnings due to lower than expected sales of Spotfire. Spotfire is the company's business intelligence software.
Management believes their Spotfire sales problem is only related to their sales execution. Yet, the company is finding customers prefer other vendors' software.
Tibco's European sales execution was especially bad but fixing it won't solve all Tibco's European problems. Qlik's new software will make it very difficult for Tibco to compete.
Management's acquisition of Jaspersoft was suppose to help strengthen Tibco's small and midsized market penetration. However, Jaspersoft isn't well suited for future business intelligence software users.
Tibco is actively exploring their options which could mean a possible acquisition. Yet if the acquisition doesn't occur, investors will continue to see Tibco's sales suffer.
Tibco (TIBX) now expects FQ2 (May quarter) revenue of $250M-$252M and EPS of $0.12-$0.13, below prior guidance of $263M-$271M and $0.20-$0.22, and a consensus of $267.5M and $0.21.
Weaker-than-expected sales of the company's Spotfire analytics/data visualization platform are "primarily" to blame. In March, Tibco stated Spotfire, which faces tough competition from Tableau and Qlik, had "performed below plan" in FQ1.
The company says core infrastructure (middleware) and event processing software sales rose during the quarter, and that it has "several changes under way" that it thinks will bolster Spotfire's performance.
Full FQ2 results arrive on June 19.
Shares are halted. They jumped last week following a report stating SAP might be interested in making a bid. If SAP is interested, it might now get a discount.
Germany's Der Aktionärreports SAP (SAP +2.1%) might be looking to acquire Tibco (TIBX +5.5%). The latter's shares have jumped in response.
Buying Tibco would strengthen SAP's middleware offerings - IBM/Oracle have a big chunk of the market - and also provide it with an analytics/data visualization platform (Spotfire) to complement its Hana in-memory database.
But an acquisition price would likely be north of $4B, and Spotfire has been struggling lately amid tough competition from Tableau and others.
On Twitter, Germantrader suggests taking the report cautiously, calling it "guesswork" and stating Der Aktionär "is not trusted in Germany."
SAP has suggested it could make some large deals, as cloud competition pressures its on-premise software license sales. Recent purchases include marketing software firm SeeWhy and labor-management software firm Fieldglass.
Tibco (TIBX) has acquired Jaspersoft, a developer of open-source business intelligence software that can be embedded within 3rd-party apps, for $185M in cash. The deal is expected to be neutral to Tibco's FY14 (ends Nov. '14) EPS.
Tibco argues Jaspersoft's offerings complements its Spotfire BI platform, which is more focused on advanced standalone data discovery and analytics. Jaspersoft claims 2K+ commercial clients and 140K+ production deployments.
Jaspersoft competes to an extent with Spotfire rival Tableau (DATA), whose data visualization/analytics platform (causing headaches for traditional BI vendors such as IBM and SAP) has embedded capabilities. Whereas Spotfire has struggled in recent quarters, Tableau posted 93% Y/Y Q4 license growth.
Plenty of enterprise software names have underperformed on a down day for tech stocks after VMware (VMW -9.2%) provided soft bookings numbers (sub-10% Y/Y growth in the Americas, EMEA, and Asia-Pac), and blamed it on delays in signing major enterprise licensing deals (ELAs) as it talks with clients about more expansive agreements.
VMware rivals Oracle (ORCL -1.6%), Citrix (CTXS -2.8%), and Red Hat (RHT -1.7%) are among the decliners. Others: CRM -2.5%. WDAY -5.6%. SPLK -6.3%. VEEV -4.3%. NOW -4.2%. TIBX -2.9%. INFA -2.2%. QLIK -3.2%.
Nomura (Buy) observes that while VMware reported 18% Y/Y billings growth, underlying growth may have been in the single digits after accounting for the AirWatch deal and other adjustments. Nonetheless, it thinks ELA weakness might be a seasonal issue that will correct in Q2.
Is competition taking a toll? In spite of the soft bookings figures, VMware managed to report strong licensing activity for products other than its core vSphere server virtualization platform, and noted on its CC (transcript) solutions other than standalone vSphere made up over 45% of license bookings (up from 30%+ a year ago).
Microsoft's Hyper-V has been gradually eating into vSphere's market dominance. Other cheaper alternatives such as the open-source Xen (backed by Citrix) and KVM have also been gaining ground.
Tibco (TIBX -2%) guided on its CC (transcript) for FQ2 revenue of $263M-$271M and EPS of $0.20-$0.22 vs. a consensus of $267M and $0.22.
Worrying some analysts: Tibco admitted its Spotfire analytics/data visualization platform, once growing rapidly, "performed below plan." The company insists product quality isn't an issue. "We been too focused on big deals and traditional enterprise sales and we must move more aggressively to broaden out into a higher volume horizontal market business."
That's something analytics rival Tableau (DATA) has been doing quite well: The company's license revenue rose 93% Y/Y in the December quarter. The next version of Spotfire aims to improve ease-of-use, long a strong point for Tableau.
Tibco's event processing/analytics license sales (41% of license revenue, includes Spotfire) fell 7% Y/Y. On the other hand, its core infrastructure license sales (middleware, 59% of license revenue) rose 18%.
Morgan Stanley (Equal-weight) sees the contrast between Spotfire and middleware's performance as another example of Tibco being hard-pressed in recent years to maintain "consistent execution" across its product line. "With productive sales capacity declining, we don't see a quick fix."
dealReporter observes a recent change in Tibco's (TIBX +1.9%) bylaws makes it easier for an activist investor to obtain board seats.
Interestingly, the move comes after one very prominent activist investor, Dan Loeb, exited a Tibco position that once stood at 5M shares (good for a 2.7% stake). There were hopes Loeb would push Tibco to spin off its business optimization unit (generally growing faster in recent quarters) from its traditional middleware ops.
In addition to establishing a BlackBerry position, Dan Loeb's Third Point LLC took a 600K-share stake in Baidu (BIDU), a 7.6M-share stake in T-Mobile USA (TMUS) and a 1M-share stake in NXP (NXPI) during Q4. At current levels, the positions are respectively worth $100M, $237M, and $56M. NXPI +1% AH.
On the other hand, Loeb unloaded the 4.4M-share Tibco (TIBX) position he had at the end of Q3. There were hopes Loeb would use his Tibco stake to push for a spinoff of the company's faster-growing Business Optimization unit. TIBX -1.7% AH.
Loeb also cut his remaining Yahoo (YHOO) position in half to 8M shares. Third Point once had a 60M-share stake in Yahoo, before striking a deal last August to sell 40M shares back to the company and leave its board.
TIBCO Software Inc. provides infrastructure and business intelligence software. Its software platform enables customers to create flexible, event-driven applications and deliver real-time, actionable insights.