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If you read the headline and thought, "Well, it must be because enterprise software companies spend so much on R&D, and so charge a lot of money to recoup their heavy investments!" you would be wrong. Very wrong. If you thought, "It must be because they have consigned themselves to an inane sales model that requires high-priced sales and marketing to fool customers into buying their software," you'd be closer to the truth.

These were my thoughts as I read Jason Maynard's analysis of why Tibco's growth has stalled:

We are maintaining our Neutral rating on shares of Tibco given the sluggish revenue growth and the need to add extra sales capacity in order to grow the business. With the stock trading at 12x EV/CFO it isn't expensive but it is hard to make a case for multiple expansion when it will take at least 2-3 quarters to see any signs of contribution from the sales expansion....

We hope management will re-evaluate their competitive position and consider the potential of linking up with a bigger player in the space that can leverage their technology assets. Given the inconsistent performance over the last few years we believe the best possible way to maximize value is through a sale to a larger software vendor looking to round out their product portfolio. We struggle to see how Tibco can grow license revenue much above 10% on a sustainable basis. [Emphasis mine.]

Learn more about this author, Amir Lawson.
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