Tibco chief eyes independence from Reuters

Tibco chief eyes independence from Reuters

Shares in Reuters moved to a new low of 156.75 pence in early morning trading on the London Stock Exchange as speculation mounted over the future of the UK media group's stake in Californian technology subsdiary Tibco.

In an interview with the Financial Times this morning, Tibco head Vivek Ranadive suggested Reuters should cut its 43% holding in his company - currently valued at $560 million - and allow the group to make its own sales to financial institutions.

"I would be more comfortable if Reuters reduced its stake to 20-30 per cent," Ranadive told the FT. "It would also remove an overhang that has worried investors."

He intimated that Tibco would be willing to dig into its own cash reserves to buy out Reuters. Ranadive believes Tibco's share price has been depressed as a result of the bearish sentiment surrounding Reuters. The stock has declined 25% over the past three to four weeks, mirroring the decline in Reuters' fortunes.

Ranadive also feels that Tibco is unfairly hampered in the enterprise software segment because of restrictions imposed by Reuters on direct sales to financial institutions.

Tibco's shares have been marked up by UBS Warburg from neutral to buy based on a strong first quarter. The bank is forecasting first quarter revenue of $67m and license revenue of $38m, down on the previous quarter but normal for the time of year.

"We believe another quarter of strong execution, a rock solid balance sheet (about $650m in cash and zero debt), and continued uptake of the new BusinessWorks product should drive multiple expansion from current levels," say UBS analysts.

Reuters will be reporting full year results next week. The stock has slipped badly in recent weeks as analysts have downgraded forecasts. By mid-morning the shares had gained slightly but continued to hover around the 163 pence mark.

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