Updated from 5:24 p.m. EDT

Tibco Software

(TIBX)

reported a year-over-year decline of more than 16% in third-quarter revenue Thursday but still managed to modestly beat Wall Street earnings and revenue estimates.

The Palo Alto, Calif.-based integration software maker offered relatively vague guidance for the current quarter and avoided projections for fiscal year 2003 altogether.

Tibco Chief Financial Officer Chris O'Meara said the company expects sequential revenue growth in the low- to mid-single-digit percentages. He said the company continues to focus on profitability and expects cash flow from operations to be slightly positive in the fourth quarter. O'Meara declined to offer guidance for fiscal year 2003, which begins in December, citing "uncertain economic conditions."

The consensus estimate on Wall Street was for Tibco's fourth-quarter revenue to come in at $68 million and fourth-quarter earnings to ring in at a penny a share. That would represent a 7.4% sequential increase in revenue but a 13% drop from the year-ago period.

"There is no doubt the macroeconomic conditions continue to affect IT spending," Tibco CEO and Chairman Vivek Ranadive said on a post-close conference call. "We're seeing some sign of postiveness and stabilization in the U.S., and we're seeing some tentativeness in Europe, particularly in Germany and the U.K."

Tibco posted a loss of $45.4 million, or 22 cents a share, as calculated by generally accepted accounting principles, in the third quarter, which includes a $19.7 million restructuring charge. That compares with net income of $10.5 million, or 5 cents a share, in the same period a year earlier, and a net loss of $56 million, or 27 cents a share, in the second quarter.

Excluding charges, Tibco said it earned pro forma net income of $1 million, or break-even on a per-share basis, in the third quarter, which ended Aug. 31. That compares with pro forma net income of $8.7 million, or 4 cents a share, a year earlier. Pro forma net loss was $2.9 million, or 1 cent a share, in the second quarter. The company said revenue fell 16.7%, to $63.3 million from $76.0 million a year earlier, and dropped 1.2%, from $64.1 million in the previous quarter.

Wall Street analysts expected Tibco to lose a penny a share on a pro forma basis on $62.4 million in revenue in the third quarter, according to Thomson Financial/First Call. The company had guided toward sequentially flat revenue and pro forma earnings ranging from break-even to a loss of a penny a share.

"I thought it was a pretty impressive quarter given what we've seen from other software companies and the environment," said Ken Kiarash, an analyst with Buckingham Research, who has an accumulate rating on Tibco. After missing numbers in the second quarter, Tibco appears to be back on track, he said. His firm doesn't do banking business.

Tibco said sales in its new BusinessWorks product, launched earlier this year and aimed at the middle market, is growing rapidly quarter to quarter, though it still accounted for less than 10% of revenue in the third quarter.

Erick Brethenoux, an analyst at Lazard Freres, said he had expected the company to close fewer than the 15 BusinessWorks deals reported in the quarter. "I'm pleasantly surprised by that," said Brethenoux, who has a buy rating on Tibco. "Indeed, middleware is a sector where people are spending. It's much more resilient in terms of spending than other sectors."

Shares of Tibco fell 14 cents, or 3.7%, to close Thursday at $3.66. In afterhours trading, shares climbed to $3.95.