Enterprise software specialist TIBCO Software (TIBX.DL) shared preliminary fourth-quarter results last week. Sales will increase no more than 2% year over year while adjusted earnings will fall 10%. Analysts had expected far stronger results, and the stock plunged. Hard.
TIBCO shares dropped as much as 23% overnight. Other than a temporary slump in the summer of 2011, it's been two years since TIBCO traded at these prices.
I've been waiting for this moment since, oh, 2007. The buying window is wide open. The morning after TIBCO's preannouncement, I bought a few shares.
What's the story?
So TIBCO stumbled a little. This would be a big deal if there was something fundamentally wrong with the company, but the miss is easily explained by factors way out of CEO Vivek Ranadive's control.
Ranadive willingly shouldered some of the blame for this miss, because the recently overhauled North American sales department still hasn't found its sea legs. But superstorm Sandy pushed some deals in progress into the next quarter. The election and fiscal cliff worries added a layer of reduced government spending. Until TIBCO figures out how to control the weather and make Congress cooperate, there's not much the company can do about these issues.
The core business remains "as robust as ever," said Ranadive. Spotfire analytics and the tibbr enterprise-class communications suite are particularly exciting, and we'll hear more about them when the full results are released next week. Archrivals Oracle (ORCL 0.22%) and IBM (IBM 1.05%) are fighting the exact same headwinds, and still don't have any answers to TIBCO's two-second advantage. TIBCO plays a vital part in the big data revolution, thanks to its industry-leading data analysis tools. None of this has changed.
And in case you didn't know, the management story at TIBCO is as Foolish as it gets. Ranadive is not only the current CEO but also the founder of the company and inventor of the technology at TIBCO's core. He's aligned with investor interests by owning 5% of the company's stock. This in itself would be enough to make Fool co-founder Tom Gardner look twice.
The big takeaway
This is a disruptive company in a red-hot market sector, and now you can get it on red-tag sale. The quality of leadership is beyond reproach, and short-term problems like fiscal cliffs and a single underperforming sales team don't add up to a hill of long-term beans. Great investors buy when there's blood in the streets, and TIBCO is swimming in the red stuff right now. All of this will go away.
TIBCO has historically been one of the best performers in my CAPS portfolio, right behind fellow hyper-growth phenoms Intuitive Surgical (ISRG -0.55%) and Universal Display (OLED 1.65%). While I'm confident that robotic surgery and OLED panels will continue to revolutionize their respective fields, I'm even more certain that TIBCO will come roaring back from this temporary rebate situation.
So yeah, I got kind of excited when I saw this brilliant stock in the bargain bin. TIBCO has stumbled before but always came back even stronger. And for some reason, I don't think the company or stock will stay down for long this time. Remember how Sandy delayed orders, thus removing them from this quarter's results? Many of them should show up in the first quarter instead. Keep an eye on TIBCO's forward guidance to confirm this thesis.
