Tibco Software Looks Like a Great Buy

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NEW YORK (TheStreet) -- It hasn't been a great year for software companies. Just when investors believe they've gotten this sector pegged, Oracle announces a disappointing fourth-quarter, which ratcheted down most analysts' growth projections and effectively knocking out its own stock.

So it came as no surprise that Tibco Software , which is in the midst of some pretty significant restructuring, also missed its targets. The only question, though, is to what extent investors can blame this software weakness on broad macro concerns -- because if that's not the case, Tibco management has some explaining to do.

While the macro environment has certainly taken a toll on Oracle, Tibco's struggles span a much longer period. Although an argument can be made that the stock's recent decline has placed Tibco shares in value territory, I do wonder how long investors are willing to wait for management's turnaround vision to be realized.

It's tough for me to blame those who bailed on the stock after these latest results, but I also think it was premature to have done so.

As noted, not much was expected ahead of Tibco's report. The company posted revenue of $246 million, down 1% year over year and up just 3% sequentially. Again, given the soft patch that others including Red Hat and IBM have revealed, a 1% revenue decline by Tibco, which is trying to transform its business, is excusable -- if not totally expected.

License revenue wasn't extraordinary, but licenses did grow 5% sequentially to $82 million. Service revenue was a bit more pedestrian, growing just 2.5% sequentially to $164 million. But the company is doing well in maintenance revenue, which continues to grow at a better-than-expected rate, up 6% year over year and 3% sequentially.

It certainly seems as if management's efforts to reorganize infrastructure sales is moving along pretty well. Remarkably, there is now light at the end of the tunnel -- even amid prolonged weakness in Europe and government spending. Profitability, particularly the company's margins, was the biggest question mark heading into the quarter.