Furthermore, the relative strength in IBM’s middleware and business analytics numbers suggests that middleware and data analytics company Tibco Software Inc. (NASDAQ:TIBX) and interactions management provider Nice Systems Ltd (ADR) (NASDAQ:NICE) could do well.
Tibco Software Inc. (NASDAQ:TIBX) finally seems to be sorting out its problems with its sales force in North America. In addition, its increased focus on big data analytics solutions, and offering its customers its service both on-premise and via the cloud, is in line with trends in IT spending. Corporations may be holding back on discretionary IT spending in general, but they are still keen to invest in niche areas like social media and customer engagement. Indeed, TIBCO cited specific strength in sectors such as financial services and retail.
As for Nice Systems Ltd (ADR) (NASDAQ:NICE), it has a deal with IBM to integrate the latter’s analytics within its services. Unlike many areas of tech spending this year, NICE has been reporting earnings that are in line with expectations. Moreover, it is seeing strength within sales of its advanced applications, which allow customers to analyze the data that its systems capture. Again, this is a sign that in a slow global economy, corporations are willing to spend on analyzing customer interactions in order to better manage how they sell into their existing customers.
The bottom line
In conclusion, IBM and Oracle have both reported earnings, and neither had particularly good news for the IT spending environment. Conditions appear to be stabilizing, but the broad-based bounceback in demand hasn’t really happened yet.
With regards to IBM itself, the company’s story is about its ongoing paring of lower-margin businesses, and how well it manages its shift toward more software sales. For longer-term investors, I think the stock will do fine. If it hits the raised adjusted diluted guidance of $16.90 in EPS for 2013, then it will trade on a forward earnings multiple of 11.4 times, as I write. This is attractive enough, but investors need to be prepared for potential near-term volatility, because tech spending remains weak.
Lee Samaha has positions in Oracle and NICE Systems . The Motley Fool recommends Tibco Software. The Motley Fool owns shares of International Business Machines (NYSE:IBM). and Oracle.
The article Finding Areas of Strength in a Weak Tech Market originally appeared on Fool.com and is written by Lee Samaha.
Lee is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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