Huge Expectations Built Into TIBCO

There are plenty of valid ways to make money in the market, but one of the easiest is to find stocks that are underappreciated by investors and wait for the company's performance to merit a better multiple. On the flip side, one of the riskier ways to invest is to find fast-growing, highly-valued companies and count on ongoing torrid growth and expanding valuations. Much as today's shareholders won't like it, middleware specialist TIBCO Software (Nasdaq:TIBX) seems to fit into that latter category. 

No Quibbling with Growth
There is nothing wrong with the underlying performance at TIBCO these days. Revenue rose 23% in the company's fiscal fourth quarter, handily surpassing the high end of what had been a surprisingly tight range. The company saw significant growth in very large ($1 million plus deals), as the company booked 25 in this quarter, versus 19 a year ago. For the quarter, service-oriented architecture was 59% of tche revenue base, a number that has stayed relatively consistent.

There was likewise little to find fault with in the profitability of TIBCO. GAAP operating income rose 27%, and the operating margin expanded by about 60 basis points. GAAP net income rose 18%, though, as taxes took a bigger bite this time around.

Is TIBCO's Time as Independent Running Short?
TIBCO competes in a very attractive market - the company's software streamlines the IT process and allows disparate packages to communicate. Allowing programs to "talk to each other" is essential these days, and TIBCO stands alone as the last pure-play integration software vendor of any real size. 


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