BEA Posts Higher Profit, But Lower Software Revenue

The San Jose, Calif., software infrastructure company said net income for the fiscal quarter ended July 31, based on generally accepted accounting principles, was up 18 percent to $30.6 million, or 7 cents a share, from $25.9 million, or 6 cents a share, during the same period a year ago. Pro forma earnings, which exclude acquisition-related expenses and other special items, were up 10 percent to $33.6 million, or 8 cents a share, from $30.4 million, or 7 cents a share, a year ago.

Revenue for the quarter was up 7 percent to $262.3 million from $245 million last year. Software-license revenue, however, dropped to $116.3 million from $127.4 million a year ago. Software revenue is considered a key performance metric for software companies. Cash flow from operations was up 19 percent to $57.2 million from $48.1 million.

BEA's results were in line with preliminary results the company issued earlier in the month.

"Despite the challenging worldwide IT spending environment, a solid quarter close enabled us to deliver reasonable results," Alfred Chuang, co-founder, chairman and chief executive of BEA, said in a statement.

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The company's "key objectives" were to increase license revenue and shareholder value, Chuang said. "The organizational changes we announced last week are designed to help us achieve those goals."

BEA has stumbled under competitive pressure from the larger IBM, which market researcher Gartner rates as the leader in the market for Java-based application servers. To boost sales, BEA earlier this month announced a restructuring that included a consolidated sales, marketing and services organization called Worldwide Fields Operations.

Tom Ashburn, former head of services, was appointed to lead the group, while Chuang took over the Product Leadership Team to drive BEA's software strategy.

The restructuring came amid a slew of key BEA executive departures, including technology visionary Adam Bosworth. Other executives who left the company over the past month include chief technology officer Scott Dietzen, Rick Jackson, vice president of products and solutions marketing; and Eric Frieberg, senior director of product marketing.

With its stock down to under $6 a share, analysts have said the company is a takeover target, with Oracle and Hewlett-Packard cited as potential buyers. BEA, however, continues to run a strong business with $1.6 billion in cash and more than $130 million in cash flow from operations in the first half of the current fiscal year, which is $51 million more than the same period last year.

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