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Technology Stocks : BEA Systems (BEAS) - Undiscovered Growth Stock -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (963)	12/13/1999 8:36:00 AM
From: Tony Smith	Respond to of 2477

there is definitely some competition out there. Software and services are IBM's true bread and butter. From this you can take away the fact the business has tremendous potential. Why would Sun and IBM be there if it didn't? As for being able to compete...BEA could be in a good position, but will need to continue its alliances with heavy hitters such as HWP (with whom was responsible for helping get a few major contracts in the previous quarters...contracts that were taken away from the likes of IBM) All in all, the high multiple factors the risk you have to take...and those who put money up for excess risk demand higher return.

To: Nadine Carroll who wrote (963)	12/14/1999 1:21:00 AM
From: fatty	Read Replies (2) \| Respond to of 2477

Well, I personally wouldn't buy BEAS at this point because I am more interested in companies at much earlier stage of growth. I brought at $20 after having seen it went from $6 to $30. I don't think the expectation is modest. Middleware is where the fun is, unlike database. But like database, it is one of those things that you wish somebody else had programmed it. There's a good change that BEAS will go up by another 500% next year. I don't undestand why you count SUNW as a competition, what products do they have that directly compete with BEAS? SUNW wish they were MSFT but by the time they become one, I'm afraid their time is past. ------ You have modest expectations, don't you? You forgot an extra 300% growth in earnings, that is, if you expect BEA to match Oracle's current modest 95 P/E opposed to BEA's 300 P/E. If however, the market decides to value companies on earnings and growth instead of dreams of unlimited growth, the stock may go down even if the company does well. And contrary to your implications, BEA does have competitors, among them Sun and IBM, who are not going to meekly cede the middleware business.

To: Nadine Carroll who wrote (963)	12/14/1999 10:58:00 AM
From: Zelix	Read Replies (2) \| Respond to of 2477

Coming to valuation. I also like to compare BEAS with Oracle, for several reasons. - as mentioned earlier, BEAS' middleware is as crucial to building transaction systems, as Oracle RDBMS. 10 years ago, I've seen UNIX-based systems designed to store data in files .. not any more. Same is the state of middleware now. - yes, there is competition. The situation is similar to where Oracle was few years ago .. when Sybase, Informix and IBM (DB2 was always a big threat to Oracle) were considered serious competitors. Now, Oracle is completely in the driver seat. Very few companies choose non-Oracle RDBMS for new implementations. - Oracle's major advantage right now is their Applications business. Yes, it is a huge business for Oracle and BEAS does not have anything comparable. (Theory Center's components are good but will attract only small customers.) - similar to Oracle .. BEAS service revenues are significant. No matter what some analysts say negatively about service/product revenue ratios .. BEAS needs their professional services to help their product implementations. Implementing middleware is still a black art and there are not many middleware experts out there. More than anything, it helps BEAS develop relationships with their customers and ensure a proper implementation. - similar to Oracle, BEAS products are proven to be highly scalable (no other product comes close in this aspect). This is exactly the reason how Oracle was able to beat Sybase in mid-90's. Scalability and reliability aspects are extremely important for the next generation systems. - similar to Oracle, BEAS ported all of their products to Microsoft NT, and has much superior offering compared to Microsoft's middleware. I personally don't know how superior Oracle's RDBMS on NT is compared to MS SQL*Server .. but BEAS middlware is hundreds of times better than MTS/DCOM. - similar to Oracle, BEAS is strongly positioned for next generation systems - B2B and B2C ecomemrce systems. When it comes to handling 100s or 1000s of transactions per second, BEAS is miles ahead of competition. - similar to Oracle, BEAS' middleware is built over 15-20 years, proven in large apps backed by dedicated R&D. The new blood, WebLogic R&D, also has proven to be the best in the industry. With the current stock performance, there is every possibility for these guys to stay put. This is very important for the continued innovation and growth. - similar to Oracle, BEAS has huge sales force to push their products (compared to Silverstream, Vitria types). Despite this analogy between the two companies, I think that BEAS is still a few years behind Oracle in valuation. Especially since it is not yet accepted as the de facto standard in the middleware industry. With all these similarities and advantages, $9 bil is a small market cap for BEAS. I'd guess $20-30 bil is more reasonable by next year. Which is still 2-3 times the current price. That is the reason, why I say the 12-month price target should be $300 pre-split / $150 after-split. If they continue to do well, next year, I don't see why it cannot reach a market cap of $50-100 bil in 2-3 years. I am a long player in BEAS, since their IPO, will be here for much longer. - Zelix