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Tibco shares tumble on weak 1Q sales

NEW YORK (AP) -- Shares of Tibco Software tumbled Friday after the company reported a steep drop in fiscal first-quarter profit and weak revenue.

THE SPARK: The Palo Alto, Calif., business software company said late Thursday that its profit fell more than 50 percent to $9.5 million, or 6 cents per share. Excluding one-time items, it earned 18 cents per share, matching the average estimate of analysts polled by FactSet.

Total revenue increased 5 percent to $237.8 million, falling short of average predictions of $242.3 million.

THE BIG PICTURE: Tibco's results follow disappointing sales results from rival Oracle Corp. earlier this week. Like Oracle, Tibco blamed its revenue shortfall on a lackluster performance by its expanding sales force, rather than a lack of demand.

THE ANALYSIS: Susquehanna analyst J. Derrick Wood cut his rating for Tibco to "Neutral" from "Positive," saying that the company's license revenue came in significantly lower than he expected and is expected to drop further in the second quarter.

Wood, who also cut his price target by $7 to $21, noted that while Tibco pointed to execution-related issues with its sales force, it also acknowledged that competitive pressures from Oracle and IBM have increased and put pressure on its pricing and ability to win business.

Wedbush analyst Steve Koenig backed his "Outperform" rating for the stock, but cut his price target by $5 to $25, saying that while Tibco's turnaround may take longer than previously expected, the company should be able to stabilize itself. He said investors should look to pick up shares if they drop to $22 or lower.

THE SHARES: Down $3.55, or 15 percent, to $19.62 in morning trading, after dropping as low as $19.15 earlier in the day. Over the past 52 weeks, the shares have traded between $18.95 and $34.67.

Since the beginning of this year, Tibco shares have risen about 5 percent.