SSB on TBIX
TIBCO Software, Inc. (TIBX)
TIBX: Pre-announces Revenue Shortfall; Lowering 3H (Neutral, High Risk)
Estimates Mkt Cap: $2,004.1 mil.
March 7, 2001 SUMMARY
* After the close, TIBCO Software pre-announced that
ENTERPRISE first quarter (ended February) revenue would fall short
SOFTWARE/B2B of our estimate. Based on their updated guidance, we
Gretchen Teagarden are lowering our 1Q01 revenue estimate to $80.5 million
from $87.7 million (which we lowered from $94.8 million
last week). We lowered revenue by reducing the number
Wes Gilchrist of deals TIBCO signs this quarter and year by 13%. We
are also lowering our 1Q01 cash EPS estimate to $0.05
from $0.07.
* TIBCO cited a weakened IT spending environment due to
concern by customers over economic conditions.
* We recently launched coverage of TIBCO on February
12, 2001, with a neutral rating. Our neutral rating
was primarily due to our long-term concerns about the
growth prospects for TIBCO's core messaging products.
* Further guidance will be given on the March 22
conference call.
* See below for a highlights from yesterday's
pre-announcement call.
FUNDAMENTALS
P/E (11/01E) 40.3x
P/E (11/02E) NA
TEV/EBITDA (11/01E) NA
TEV/EBITDA (11/02E) NA
Book Value/Share (11/01E) $4.22
Price/Book Value 2.6x
Dividend/Yield (11/01E) NA/NA
Revenue (11/01E) $437.5 mil.
Proj. Long-Term EPS Growth 50%
ROE (11/01E) NA
Long-Term Debt to Capital(a) NA
(a) Data as of most recent quarter
SHARE DATA RECOMMENDATION
Price (3/7/01) $10.88 Current Rating 3H
52-Week Range $138.19-$9.88 Prior Rating 3H
Shares Outstanding(a) 184.2 mil. Current Target Price $16.00
Convertible No Previous Target Price $16.00
EARNINGS PER SHARE
FY ends 1Q 2Q 3Q 4Q Full Year
11/00A Actual $0.01A $0.04A $0.07A $0.10A $0.24A
11/01E Current $0.05E $0.06E $0.08E $0.09E $0.27E
Previous $0.07E $0.08E $0.10E $0.11E $0.36E
11/02E Current NA NA NA NA NA
Previous NA NA NA NA $0.54E
11/03E Current NA NA NA NA NA
Previous NA NA NA NA NA
First Call Consensus EPS: 11/01E $0.32; 11/02E $0.53; 11/03E NA
ESTIMATE REVISIONS
We are lowering our 1Q01 revenue estimate to $80.5 million from $87.7 million
(which we lowered from $94.8 million last week). We are lowering our FY01
revenue estimate to $437.5 million from $462.0 million. We lowered revenue by
reducing the number of deals TIBCO signs this year by 13%.
We are lowering our 1Q01 EPS estimate to $0.05 from $0.07 (which we lowered
from $0.08 last week). We are lowering our FY01 EPS estimate to $0.27 from
$0.36.
CALL HIGHLIGHTS
* TIBCO saw a number of customers delay decisions related to IT spending this
quarter, particularly in the domestic market. Management highlighted that
the company did not miss earnings expectations due to competitive pressure
but because of a slowing in general IT demand and the economic climate.
* TIBCO management stated the company was on track to meet estimates but that
late in the quarter (in February), a variety of deals scheduled to close
were delayed. The company stressed that projects were not being canceled.
The delayed deals are deals which TIBCO has technically won but are still
in the approval cycle.
* In terms of deal size, TIBCO stated deals of various sizes were delayed.
Customers stated that they would wait until it became more necessary to
complete current projects.
* TIBCO stated it was seeing more weakness for its B2B integration products
than for its EAI products.
* TIBCO is seeing some delays in Europe though not as much as domestically.
TIBCO expects international revenue to make up a larger-than-expected
percentage of total revenue this quarter.
* No one vertical seemed to stand out as a source of delayed deals than any
other.
* TIBCO stated it was in a good position to weather the economic slowdown and
would also undertake to streamline its operations. The company feels its
customer base is strong and is not at long-term risk due to current
economic conditions though they may delay implementations. Further, TIBCO
feels its global presence, size, and financial position are strong and
position the company well relative to competitors.
* TIBCO stated that there were no changes to the competitive landscape in the
quarter and mentioned SeeBeyond, webMethods, Vitria, and IBM as their key
competitors. |
