Why Third Point moved out of Tibco Software

Dan Loeb’s Third Point liquidated a 2.77% stake in Tibco Software, Inc. (TIBX) last quarter. Tibco provides infrastructure and business intelligence software worldwide. The company offers products in the areas of integration and core infrastructure; business optimization; and process automation and collaboration.

Why Third Point moved out of Tibco SoftwareShares of the middleware and infrastructure software provider were up last month on rumors that Loeb has been building up his stake in Tibco and that the company could see an activist push. The unconfirmed report said that Loeb was looking to cash in on the current trend of “software giants’ ongoing appetite for data analytics and mobile software.”

Tibco’s 4Q 2013 earnings declared in December last year beat market expectations but failed to meet estimates on outlook, while license revenue was just in line with the company’s guidance. The company reported fourth quarter earnings of $44.5 million, or $0.27 a share, on revenue up 6% to $315.5 million. Non-GAAP earnings for the fourth quarter were $0.42 a share. License revenue was $139.7 million, up 3% year-over-year. Services revenue, which includes professional services, hosted services and maintenance revenue, was $175.7 million, up 10% from last year.

Why Third Point moved out of Tibco SoftwareTibco said on the earnings call that its core infrastructure segment grew at over 15%, reflecting the strength of the U.S. infrastructure business. Business optimization was more mixed with the event processing category having a record quarter, but data visualization software Spotfire’s performance, despite being up sequentially, was “down year-over-year versus a very tough 4Q comp.” Growth in process automation was lighter than expected due to weakness in Europe.

For 1Q 2014, Tibco expects total revenue to be in a range of $247 million to $253 million and license revenue to range between $78 million to $84 million. The non-GAAP operating margin is expected to be 17% to 18% and non-GAAP EPS for the quarter is expected to come in between $0.17 and $0.18 with an assumed tax rate of 26%. A soft guidance led to a fall in the share price post earnings.

Tibco’s competitors include IBM (IBM) and Oracle (ORCL).