TIBCO on the block?

Profile picture for user gonzodaddy By Den Howlett August 6, 2014
Summary:
TIBCO once again is rumored to be for sale. The shares are spiking on the news but who will buy, if anyone? Hard to say.

TIBCO share spike
Is TIBCO in the block? Shares in TIBCO are currently spiking close to 10 percent following a Seeking Alpha report that claims the company is up for sale.
  • Dow Jones reports Tibco (TIBX +5.8%) is reaching out to potential buyers. Shares have spiked in response.
  • SAP was at one point rumored to be interested in the middleware/analytics software vendor, which has had a rough year to date. But SAP has since declared it's not looking to make a large acquisition.
  • Activist investor Praesidium Investment disclosed a stake in Tibco in June, and said it would share its views on the company with "potential acquirers."

TIBCO has made no official statement and you wouldn't expect them to. This is not the first time the company has been rumored to be on the block. Only this time, the rumor may well have legs.

Over the 15 years I've been following the company, I've seen it rocket in the dot com boom period, at one time reaching a valuation of $15 billion at a time when it only had $300 million in revenue to a more sedate $3.5 billion on annual sales a tad north of $1 billion but a strong EPS.

In the past when such rumors have come up I have consistently said the company would make a good fit for SAP given that its own integration software is spartan. But there was always the possibility of a difficult culture clash and even though fluids were exchanged in the form of coffee over the years, they never came to anything.

This time, TIBCO has an added attraction - Spotfire - an analytics solution set that has strong potential in SAP's core markets if it wasn't for the fact that Tableau is eating everyone's lunch. That in turn has meant that CEO Vivek Ranadivé has had to admit the company took its eye off the ball regarding a product that many believe is the only real engine for growth left in TIBCO.

All of which leaves TIBCO struggling to find a buyer, if that is indeed what they are doing. At this stage, SAP would have to think at least twice before making a play for a company where it has also been rumored that the CEO wants to get closer to $5 billion in  a sale rather than the current market valuation. That no longer seems likely.

TIBCO's difficulty is that with Spotfire currently mired, its core integration business isn't really going anywhere. The market does not yet have the appetite for another round of large scale integration projects when even large enterprises can make do with a mixture of semi-detached applications running both on premise and in the cloud.

It will be interesting to see how this plays out but don't hold your breath. Activist investors or not, we've all been here before. But then the persistent rumor is that Ranadivé has other things on his mind - basketball.