Software integration players






are off sharply in recent trading Wednesday, following a warning by Tibco that it will miss earnings estimates. Tibco was off 25 cents, or almost 6%, to $4.27 a share, while WebMethods shed 85 cents, or 8%, to $9.32 a share.

Palo Alto, Calif.-based Tibco said it expects to report revenue of between $61 million and $63 million for the just-ended February quarter, compared with Wall Street's expectations of $68 million. The company expects to report pro forma earnings per share between break-even and a profit of 1 cent. Analysts surveyed by Thomson Financial/First Call had expected the company to earn 2 cents a share.

Much smaller WebMethods apparently fell in sympathy with Tibco on fears that the market for software integration products, generally seen as a hot spot, was less robust than believed.

Tibco said it was on track for the quarter until the end of February, when a number of deals unraveled. Like many software companies, Tibco typically closes significant amounts of business at the close of a quarter. The company blamed continuing concerns about a possible war and the still-constrained IT spending environment for the collapse of the deals.

UBS Warburg analyst Jordan Klein lowered estimates following the warning, and said the problems were disappointing, but not disastrous. "There is relatively little downside from current levels," he wrote in a note to clients. "TIBX has about $3 per share in cash, no debt, and carries an '03EV/Sales multiple of 1.2 times that is at a 52-week low and more than 70% below the average over the past year." Klein's company has a banking relationship with Tibco.

Thomas Berquist of Goldman Sachs, however, was more concerned and downgraded Tibco to underperform from in-line. He cited Tibco's exposure to large struggling verticals such as telecom and transportation as a negative, and mentioned that the company's history of large deals makes it more vulnerable in a tough spending environment. Goldman Sachs also has an investment banking relationship with Tibco.