STOCKWATCH - Blame the war, don't blame the war
STOCKWATCH - Blame the war, don't blame the war
The US threat of a war against Iraq has been topping the news pages for weeks and has been a significant influence on the financial success, or not of the storage vendor community. This week storage software vendor Legato said the way was not affecting purchasing decisions, but Tibco says it is.
Speaking at a Deutsche Bank Securities conference Legato chief financial officer Andrew Brown said that revenues were rising by 20 per cent and he stated that the threat of war was not affecting purchasing decisions in the current quarter. He described their business in the first quarter as "fairly normal", adding; "I don't think we've felt anything from Iraq," but he did say that if the US goes to war with Iraq is could produce market uncertainty.
Legato was the source of market speculation a week or two ago, when Reuters reported stories of EMC bidding to buy the software vendor out. Reuters has reported that Mr Brown would not be drawn on the buy out stories.
This week saw Legato shares drop 7 cents to US$5.77 on Wednesday, the company still as a market value of $671 million.
If the threat of a war against Iraq is not hurting Legato, it is certainly hurting Tibco. At the end of trading yesterday, Tibco's shares had lost 25 cents as the company announced that its reported revenues for the quarter ending in February were $61 million, Wall Street was looking for $68 million.
Tibco was, it said, on track to report the expected $68 million, but a series of deals did not come together at the end of the quarter. Tibco closes its deals at the close of a quarter. It said the deals did not come together because of concerns within the market about the war.
As a result of the lowered revenues, UBS Warburg analyst Jordan Klein lowered estimates on Tibco, but said that the news was disappointing, but not a disaster. Adding a silver lining to the black cloud, he said; "Tibco has about $3 per share in cash and no debt."
Over at Goldman Sachs, analyst Thomas Berquist said he was concerned as he downgraded Tibco to 'under perform' from in-line. According to Mr Berquist, Tibco's concentration on vertical markets such as telecoms and transport makes it vulnerable to changes in the market atmosphere.
None of the analysts mentioned the war.
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