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Stephanie Link's Can Kickers: Notes on Informatica

Stocks in this article: INFAIBMSAPCTXSVMW

NEW YORK ( TheStreet) -- Last night Informatica (INFA) negatively preannounced earnings and shares are down over 26% in premarket. The company blamed softness in Europe and also internal execution issues. The Europe weakness isn't a surprise especially after Oracle and Adobe both saw European slowness but the magnitude of the miss was. License revenues are now expected to fall 17-19% versus the positive 10% consensus. Revenues missed consensus by 13% and earnings by 24%.

Europe certainly was a factor but it's also company specific issues with a management transition and sales execution issues as well as tougher competitors in Oracle (ORCL), SAP (SAP), IBM (IBM) as well as Citrix Citrix Systems (CTXS) and VMware VMware (VMW). It's always interesting to look at a stock that falls this much in a day to potentially buy it, but this one could stay depressed for a while - especially given its head of worldwide sales leaving and new products from its competitors (especially at SAP and Oracle). Plus it has a P/E multiple of 30x - so there is no margin for error.

EMC (EMC) owns 80% of VMware and will likely be hit on the news (its total European exposure is 30% of total revenue) but it's one that we continue to like in the low $20s. EMC is the leader in data storage, has the broadest product set (it announced 40 new products this year in high, medium and low end product lines), continues to take share from its biggest competitor (Network Appliance) and trades at a much more reasonable multiple 11x forward estimates.

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