BEA Systems Pulls Ahead After Beating the Street

Breaking the stream of disappointing earnings results in the tech sector, BEA Systems (Nasdaq: BEAS) jumped US$3.11to $37.15 in morning trading Wednesday, after the company said first-quarterprofit tripled, beating Wall Street estimates.

The San Jose, California-based e-commerce software developer also said itwas confident of meeting expectations for the rest of the year, as itcontinues to snag market share from competitors.

“With the new and enhanced products we introduced recently, as well as newproduct introductions planned for this summer, we are raising the value weprovide our customers while increasing our technology lead,” said BEA chairmanand chief executive officer Bill Coleman.

Wall Street analysts have been divided on the company’s outlook beyond thefirst quarter. Some have raised concerns that a slowdown in informationtechnology (IT) spending by U.S. companies would hurt BEA’s outlook, while otherssay the company is particularly vulnerable to pricing pressures fromstiffening competition, including rival IBM (NYSE: IBM).

On Wednesday, Lazard Freres downgraded the issue from outperform to hold.

For the fiscal first-quarter ended April 30th, the company said pro forma netincome — which excludes acquisition-related costs, employer payroll taxeson stock option exercises, and net gains on investments in securities — was$35.9 million, or 8 cents per share, up from $12.4 million, or 3 cents pershare, in the year-ago quarter. Analysts surveyed by Thomson Financial/FirstCall had expected the company to earn 7 cents share.

Revenue for the period spiked 67 percent, to $257.2 million from $153.7million in the first-quarter 2000. Including all items, the company said itearned $20.6 million, or 5 cents per share, compared with a loss of $12.4million, or 3 cents per share, in the year-ago period.

BEA Systems reported that pro forma earnings quadrupled to $46 million from$13.3 million. During the quarter, license-fee revenue rose 89 percent to$161.2 million from the year-ago period. Bookings for the quarter were in linewith management’s expectations.

The company also lifted its earnings outlook for fiscal 2002 to the range of41 cents to 43 cents per share, higher than the 39 cents to 41 cents pershare the company previously predicted.

The company said it is handing over some of its servicebusiness to partners in an effort to drive more profitable licensing revenues.

1 Comment

  • Does anyone know how much of BEA’s growth is attributed to direct sales vs. resale by 3rd parties? I’m asking because it seems most CRM applications vendors rely on a BEA systems application server… seems like a good guarantee of competitiveness in the face of IBM.

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