BEA may very well be a baby gorilla -- it's well positioned. But remember, J2EE is an open and evolving standard....
If it ain't open, it can't be a gorilla. Imagine that?
"Open" in the context of the gorilla game implies that the interfaces be published and other vendors are encouraged to integrate their products with the gorilla product to create a whole product for a target customer.
Would you agree or disagree that BEA's J2EE is a "proprietary open architecture with high switching costs" and that the published interface is open to other vendors?
Also, BEA is currently priced at 80x predicted fy 2002 earnings, which seems more than fair even if it does grow into a gorilla. P/Es tend to compress in a bear market.
You are not just whistlin' Dixie there, Nadine. I'm watching BEAS very, very closely for signals of a bottom formation to unfold. In other words, I've been on the sidelines. No need to mention that BEA Systems stock price has come down from a price of $89.50 per share to $22 this past week before recovering back up to $29.375 by week's end. During that entire process, the fundamentals at BEA actually continued its excellent growth proving the old standard that the company and the stock are separate entities.
As of Friday's close, BEAS trades at an estimated (I like that word better than 'predicted') forward PE of 68 based on management's continued guidance for current fiscal year. It would be difficult - at best - to nail down estimates for 2002 at this point. Earnings revisions made in the past 3 months, 1 month and 1 week - in aggregate - have all been on the plus side. Management has just indicated that the backlog is already building for next quarter even though this quarter is only at the midway point. That's not to say it couldn't suddenly fall of a cliff, but in a sea of 'no visibility', BEA Systems seems to have more visibility than others. That doesn't mean the stock does well (as we saw with Manugistics who also had visibility and saw robust forward demand). Coleman speaks this morning at Salamon Smith Barney's San Francisco technology day. I'm sure many will be listening to his words.
The price to sales ratio for BEA Systems (14.79) trades around the PSR for MSFT (12.73) and AOL (14.06). AOL and BEAS have excellent estimated EPS growth as opposed to MSFT.
Yes, multiples do contract in a bear market and BEA Systems has seen their multiples contract since October of 2000. During that same time frame, EPS and revenue growth both on a sequential and y/y basis have continued on the healthy side. On a technical basis, last time I looked, the downtrend has not yet been broken. I wrote a message back on March 18 about the trendline of BEAS. At that time, I identified the trend between $28.375 and $38 as a range BEAS was contained until a breakout in either direction took place.
boards.fool.com
This past week on Wednesday/Thursday we saw BEAS break below that $28.375 point down to the $22 level only to finish the week back in the previous range at $29.375. The reason the stock broke below that range on Thursday/Friday could be attributed to the false SUN bundling news, end of quarter window dressing or whatever, but I would appreciate any comments on that move and the fact that it closed back up in its previous range. As this study is all new to me, I don't know how to categorize that temporary two day trip below the range on a 'news' related matter - so any comments are welcome and appreciated. I imagine the obvious is to see how the stock reacts in the next few days and weeks to see if it remains in the $28.375 to $38 range, or revisits the sub $28.375 range to whatever the low could end up to be. ( I believe that low was $22 3/8.)
Spy - if you're out there reading this, based on that two day trip below the $28.375 to $38 range - where do I now draw my trendlines?
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