BEA Unleashes Overdue Financial Reports, Talks Up Growth

$2 billion more $6.6 billion Oracle offered last month

Middleware software maker BEA provided brief quarterly updates on its revenue and cash flows throughout 2007 but had not filed quarterly financial reports with the U.S. Securities and Exchange Commission all year because of an ongoing investigation into its past stock-options practices. In February, BEA detailed a decade-long policy of manipulating grants to artificially inflate their value or extend their exercise window, and said it was working with its auditor to amend its financial reports.

Thursday's rash of filings included BEA's delinquent annual report for the fiscal year ended Jan. 31, 2007, and the results of its most recent quarter, ended Oct. 31. While license fees dropped 1 percent, to $134.8 million, BEA's total revenue for its third quarter rose 11 percent from last year, to $384.4 million. Net income for the quarter was $56 million, up 59 percent.

On a conference call with analysts following the results release, BEA CEO Alfred Chuang struck an optimistic tone, positioning BEA as a company poised for success as an independent entity. Initiatives like BEA's AquaLogic line of SOA (services-oriented architecture) management products have been "very, very successful," and under-development ventures such as Project Genesis, a new technology for assembling and modifying process-focused business applications, promise to unlock even more value in BEA, Chuang said.

"When you value BEA, it's very import to consider our growth prospects," he said.

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Despite Chuang's buoyant rhetoric, the assumption on Wall Street is that BEA will soon be sold off, most likely to Oracle. Oracle CEO Larry Ellison threw kerosene on the smoldering embers of Oracle's rejected bid yesterday, telling analysts attending his company's annual financial meeting that any future bid for BEA will be for less than the $17 per share Oracle previously offered. Reducing its bid is a tactic Oracle has used before against companies that resist its advances: In its acrimonious fight for PeopleSoft, Oracle twice reduced its offer price, before finally sealing a deal for a slight premium on its previous best offer.

Chuang acknowledged on BEA's conference call with analysts that his company remains in play: BEA is exploring several options for maximizing shareholder value, "including a possible sale of the company," he said. BEA disclosed yesterday that its board amended its change in control severance plan earlier this month, formalizing compensation and health care benefits and accelerated stock-option vesting for substantially all of its employees in the event that it is sold.