Why Jive's Shares Lost Their Mojo

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Jive Software (Nasdaq: JIVE  ) juked the market this morning, falling by over 17% after updating its guidance to levels below the Street's expectations. The enterprise social networker came in just barely ahead of second-quarter estimates with $27 million in revenue, versus analysts' consensus of $26.8 million. Net losses of $0.11 per share were as expected.

However, Jive now anticipates a $0.10 to $0.12 loss on between $28 million and $29 million in revenue for the upcoming third quarter. Wall Street had expected $29.6 million in revenue and a $0.10 loss.

So what: Full-year guidance also failed to impress, as the range of $110 million to $113.5 million on the top line and $0.38 to $0.42 in losses per share were on the lower end of Wall Street's consensus. Analysts had predicted $112.9 million in revenue and $0.39 in losses per share. Citigroup analysts subsequently downgraded Jive from buy to neutral, with a $21 price target.

Now what: Jive's new projections don't seem so low as to justify this correction on their own. Revenue was up 51% from the year-ago quarter, and losses in that year-ago quarter were a weighty $0.68 per share. Jive remains a possible takeover target, especially in light of Microsoft's (Nasdaq: MSFT  ) recent acquisition of enterprise social-networking competitor Yammer for $1.2 billion. Jive's current market cap is less than $1 billion, so it could be bought at a premium by any number of large tech companies.

Want more news and updates? Add Jive to your Watchlist now.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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