Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (710)	5/22/2005 11:18:18 AM
From: richardred	Respond to of 7254

BEA Systems seen as takeover target MAY. 19 2:28 P.M. ET BEA Systems Inc. shares rose Thursday as Wall Street again began placing bets on whether the business software maker might pique the interest of a potential suitor, with most of the speculation placed squarely on rival Oracle Corp. The San Jose, Calif.-based company, which makes application server software, reported late Wednesday that first-quarter profit rose 35 percent year-over-year. Demand continues to be steady, and analysts see that as being a major selling point for a possible takeover. Shares rose 38 cents, or 4.7 percent, to $8.52 in afternoon trading on the Nasdaq. The stock, which traded at more than double its daily average volume of 6.4 million shares, is still below its 52-week high of $9.86 reached back in December. "BEA represents a very attractive acquisition candidate given the strong customer base and robust maintenance revenue stream," said Credit Suisse First Boston analyst Jason Maynard in a note to clients. "The good news for the stock is that the data points for the next month should be fine and acquisition speculation continues to permeate the market." The most likely suspect may be Oracle, the Redwood Shores, Calif.-based maker of database management software. Top executives at the company -- who just months ago clinched a hostile takeover of PeopleSoft Inc. -- have expressed interest in soon making another major acquisition. During a legal battle between Oracle and PeopleSoft earlier this year, it was disclosed during hearings that Oracle was interested in acquiring BEA Systems. There has also been talk of Oracle's interest in buying software maker Siebel Systems Inc., which has been under pressure by institutional shareholders to increase value. Either way, analysts reacted positively to BEA's strong first-quarter results. The company reported net income of $34.1 million, or 8 cents per share, up 35 percent year-over-year, and said revenue climbed 7 percent to $281.7 million. Excluding items, the company earned $35.8 million, or 9 cents per share -- in line with Wall Street expectations. BEA said quarterly license revenue fell to $116.1 million from $120.2 million a year ago, but services revenue edged higher to $165.7 million from $142.5 million last year. License revenue -- the amount corporations pay to continue using software packages and an indicator of business growth -- has steadily declined as many customers have cut back on capital spending. Looking ahead, BEA told analysts it expects license revenue will begin to improve during the current quarter. Total revenue is expected to be between $281 million to $291 million during the second quarter, which would mark 7 percent growth year-over-year. "It appears first-quarter license revenue was higher than our forecast as a result of modestly stronger bookings and the consumption of additional backlog," Maynard said. "Implied license revenue guidance for the second quarter of $112 million to $124 million is clearly sending the signal that management believes the business has bottomed and growth is around the corner." CSFB told clients it felt BEA's second-quarter license revenue guidance appeared "a bit aggressive" considering revenue growth has been running flat to down during the last few quarters. However, the securities firm maintained its "Neutral" rating on the company, and raised 2006 estimates to 39 cents per share on revenue of $1.15 billion, up from earnings of 37 cents on revenue of $1.11 billion. Also impressed with BEA Systems performance -- and outlook -- was Jefferies & Co. The New York-based securities firm upgraded the company's ratings to a "Buy" from a "Hold" on the positive earnings report. businessweek.com