BEA Shares Fall Amid Speculation About Company's Future

The news followed a curtailed report on BEA's just-ended quarter. The San Jose, Calif.-based company is behind in its formal financial reports as it continues untangling an options accounting mess.

BEA edged past expectations for the quarter ended Jan. 31, bringing in revenue of $391.8 million, up 15 percent from last year's fourth quarter and slightly ahead of analysts' consensus estimate. But BEA warned that sales in its current quarter will be in the $350 million to $364 million range, slightly below what analysts predicted.

BEA's executives cited the software company's new AquaLogic line of service-oriented architecture (SOA) software as a bright spot. AquaLogic generated 25 percent of BEA's $168.7 million in fourth-quarter license revenue (up 8 percent from a year ago), and brought in $110 million in its license sales during its first full fiscal year on the market, the company said.

"AquaLogic is driving key SOA wins in competitors' accounts, because AquaLogic can seamlessly co-exist with our customers' existing systems and because customers' own benchmarks demonstrate that AquaLogic delivers the goods," BEA CEO Alfred Chuang said in a statement.

But analyst Ron Schmelzer of SOA research firm ZapThink said he doesn't see BEA emerging as an SOA leader. IBM has been the most dominant player in winning market share for its SOA middleware, and Oracle and SAP are leveraging their large base of applications customers to build their SOA presence, he said.

"BEA has not been as successful. I think we see BEA less day-to-day than we did in the Web 1.0 days," Schmelzer said. "They made some acquisitions -- Fuego and Flashline -- that weren't really SOA-oriented. Their message is somehow getting buried."

Financial analysts are also skeptical about AquaLogic's impact. Sanford C. Bernstein and Co. analyst Charles Di Bona noted that AquaLogic's strong showing came amid a serious decline for WebLogic license revenue.

"We are concerned that AquaLogic portal sales may be cannibalizing WebLogic portal sales, rather than generating incremental growth," Di Bona wrote in a research note. Goldman Sachs also commented on WebLogic cannibalization, and UBS downgraded its rating on BEA and speculated on its value as aqusition bait.

"Given what will be perceived as a broken story, the next question has to be, does this asset offer value to another party?" UBS analyst Heather Bellini wrote.

BEA is also battling the dark cloud of an accounting scandal. The company announced demotions of several executives last week as it neared the end of an internal investigation into systematic manipulation of its options grants. It is currently delinquent on financial filings as it prepares to restate a decade's worth of annual reports.