Tibco boosts BI with Insightful buy

Tibco Software is to boost its business optimization portfolio after announcing last week that it would purchase data mining specialist Insightful in a deal worth nearly $25 million.

Insightful specializes in statistics and data mining tools for business intelligence (BI). The use of predictive analytics allows companies to discern patterns, trends, and relationships hidden in the data they collect.

Tibco meanwhile provides enterprise software centered around the service-oriented architecture (SOA), business process management (BPM) and business optimization segments. Tibco said it would add Insightful's products to its business optimization portfolio.

The acquisition of Insightful is Tibco's second acquisition in the BI space, after it acquired Spotfire in May 2007 for approximately $195 million in cash.

Under the terms of the Insightful deal, Tibco will pay $1.87 per share in cash, making the deal worth approximately $24.3 million, including certain assumed options. This price represents a premium of 29 percent over the average closing price of Insightful's common stock over the sixty trading day period ending on 18 June, the last trading day before the deal was announced.

"Our Board of Directors has evaluated strategic alternatives for Insightful and has determined that this outcome is in the best interests of our stockholders," said Jeff Coombs, president and CEO of Seattle-based Insightful in a statement.

There is little doubt that it has been something of a tough trading period for Insightful recently. It described its last quarterly financial results as disappointing, after first quarter revenues fell to $4.9 million from $6.2 million, and it reporting a net loss for the quarter.

Prior to that, for the year ending 31 December, revenues slipped to $22.3 million from $24 million in the year prior to that. It also posted a net loss of $1.7 million for the 12 month period.

"Financially it's both a great win and exit strategy for Insightful, a publicly-held company that seemed destined for a fire-sale after a gradual meltdown in new sales," commented Madan Sheina, of analyst house Ovum.

"The company has been treading corporate water to stay afloat for the past few years," he added. "While Tibco is still sitting on a large pile of cash, the big question now is whether the $25 million forked out for Insightful will squeeze Tibco's share price."

Sheina feels that technologically, this acquisition signals a deeper push for Tibco into analytics - following its acquisition of Spotfire. "The Insightful name will probably be dropped as a separate product brand and be merged as part of Tibco Spotfire's Enterprise Analytics Platform. Significantly Insightful's flagship S-Plus statistical data analysis engine, which has powered Spotfire's solution since 2005, now falls under Tibco's direct ownership."

"Expect deeper integration and some interesting opportunities to layer Spotfire's visualization capabilities for data mining," said Sheina. "What the future holds for existing Insightful customers is unclear at this stage."