Tibco Falls After Missing Forecast

SAN FRANCISCO - Shares of Tibco(TIBX) fell Wednesday after the company disclosed Tuesday that its second-quarter profits would fall short of the Street's expectations.

Shares dropped 83 cents, or 10.8%, to $6.89 early in the session before recovering to trade at $7.26 on very heavy volume.

The Palo Alto, Calif., maker of middleware, or component-connecting software, said EPS, excluding special items, would be 5 cents or 6 cents, vs. analysts' estimates for 8 cents, according to Thomson Reuters. Revenue will range between $147 million and $149 million. Analysts were expecting a top line of $154.1 million.

Jefferies analyst Katherine Egbert suggested that Tibco's revenue shortfall could be the canary in the coal mine for software stocks in the second quarter. With a slowdown anticipated in IT spending, Tibco's results "may look like a wake-up call," she wrote Wednesday. Jefferies makes a market in Tibco.

However, the results of larger vendors such as Oracle, which is scheduled to report earnings June 25, will likely tell the story. The company, which already supplies infrastructure software to businesses, acquired Tibco competitor BEA Systems in April.

And middleware leader IBM(IBM) has acquired several infrastructure-software companies in recent years.

While the economic environment in the Americas has been challenging, Friedman Billings analyst David Hilal wrote Wednesday, "We also believe the weaker-than-expected results are due to waning demand for TIBX's products and intense competitive pressure ... specifically from IBM and ORCL."

The company will find it challenging to deliver good results on a consistent basis, Hilal wrote. He expects Tibco shares to be "range-bound" for the foreseeable future. FBR makes a market in shares of Tibco.