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Is TIBCO the Next "VMware for Software"?

You know, I've been talking about what an attractive buyout candidateTIBCO Software (Nasdaq: TIBX  ) is these days. After last night's earnings call, I'm prepared to see TIBCO as an independent business for a while longer. Simply put, remaining independent might be in the company's best interest.

The numbers were very good. Revenue of $147 million and GAAP earnings per share of $0.03 both exceeded the top end of the official guidance range by a slim amount. Sales grew 17% compared to the year-ago period. Net income, on the other hand, dropped from $0.05 per share last year. Fading earnings don't greatly concern me, though -- especially when operating cash flow grew by more than 40% to $60.2 million, which is more than 10 times the $5.5 million net income. Cash is still king.

So what about the change of heart on TIBCO's acquisition prospects? Last quarter, CEO Vivek Ranadive described his company as the Switzerland of infrastructure software, and that description is starting to ring true. As the sector consolidates, with mature players such as Oracle (Nasdaq: ORCL  ) , IBM (NYSE: IBM  ) , and SAP (NYSE: SAP  ) growing mostly by acquisition, TIBCO likes to stay neutral.

"It's good for us because customers want to go to a neutral party," Ranadive said back then. He noted that the HR department is getting "flooded with resumes" from experienced software salespeople as the company expands globally. "And not surprisingly," he said, "Oracle and BEA Systems (Nasdaq: BEAS  ) were the places that we hired the most people from, followed by IBM and SAP. It's been good for us so far."

It all makes sense, too. TIBCO's key strength, after all, is that its business-management platforms have the ability to tie together disparate and possibly disorganized business-software components into a coherent and manageable system.

If the Switzerland analogy weren't enough, Ranadive also called his company "the VMware (NYSE: VMW  ) for software." Customers don't have to throw out the systems and processes they already have in place to implement a TIBCO installation. Just "layer in service-oriented architecture and business project management into that, and leverage existing investments."

If a neutral market position gives TIBCO the power to sneak in and be the glue between installations from other vendors, then the company might be better off alone. Then again, there are other cash-rich and deal-hungry technology companies that don't yet have much of a stake in this middleware environment. EMC (NYSE: EMC  ) , anyone? TIBCO could become VMware's corporate cousin when it's all said and done.

Further Foolishness:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure knows how to swing a deal under difficult conditions.

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