NEW YORK ( TheStreet) -- One earnings quarter never makes or breaks a company, at least not one worthy of your investment. Yet somehow the Street seems to believe that Tibco Software (TIBX), which soared to a new 52-week high following a strong September quarter, should pick up its tent and vanish after its latest results.
This pretty much sums up the narrow-minded thinking that has caused investors to miss out on some pretty strong opportunities in the software industry, where names like Oracle (ORCL) and Adobe (ADBE) did well despite constant bearish sentiment.
Tibco has a well-deserved reputation in areas like business optimization and process management. I believe the stock's recent 14% decline represents an overreaction. Management didn't issue glowing first-quarter guidance, relative to the outlook issued by Oracle; I believe Tibco's caution has more to do with lack of visibility than lack of confidence. Opportunistic investors can still do well here.
Before we get ahead of ourselves, let's not act as if the long-awaited return of IT enterprise spending has materialized. Results from Cisco (CSCO) and several other enterprise-dependent giants like IBM (IBM) and Red Hat (RHT) shot down that notion a while ago.With fourth-quarter revenue climbing 6% year over year and 10% sequentially, I believe Tibco continues to do an adequate job of balancing growth expectations with meaningful share gains. What's more, Tibco is doing this in an environment where the Street is ready to applaud low single-digit revenue performances by Oracle. On the flipside, Tibco's 3% license revenue growth was a little light. But management continues to offset this weakness with meaningful contributions from the service and maintenance segment. The problem, though, is that investors aren't always willing to reward software companies solely based on lower-margin service/maintenance performances, especially when management's outlook disappoints.
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