Monday, July 04, 2005

The most compelling tech target now

A recent earnings disappointment sent Tibco (TIBX) shares from around $13 to $6.5 now. At this price, Tibco must be extremely attractive to Oracle and Sun, though Sun already made a not-so-smart move in this direction by going after Seebeyond recently.

Tibco's large customer base is worth acquiring even at a large premium. In addition, it doesn't hurt that Tibco's software (I have been an end-user before) is of a higher quality than the typical takeover target.

An immediate offer will likely be in the $10 area. But if a takeover happens later than 6 months or more, thus giving enough time for the stock to recover a bit, it could ultimately fetch a price in the $16-20 range - a range that sounds too aggressive today.

If you are patient I recommend making a large bet on this stock. The book value of around $3.5 also provides support on the downside.

I would like to see some insider buying, but (as I have stated before) the option-overdosed tech insiders don't really need to buy in the open market.

An interesting possibility is a buyout of Tibco by BEA (BEAS). Not only will it allow BEA to offer a more complete product suite, it will also help BEA to bulk up and thwart any hostile takeover attempts, say from Oracle!


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