Sarbanes Oxley Compliance Journal

Jacques Martin

Subscribe to Jacques Martin: eMailAlertsEmail Alerts
Get Jacques Martin: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


Article

How Low Does BEA Have to Go?

How Low Does BEA Have to Go?

Related Links

  • Is BEA DOA? 
  • How Long Can BEA Survive, Industry Asks
  • Why WebSphere?
  • A Successful Ingredient Offers Choice
  • A Leader with New Customers

    How low does BEA have to go before Oracle or, for that matter, anyone makes an offer for BEA? The answer may be lower than you think.

    Someone, anyone buying BEA has been a perennial topic of conversation for the past couple of years. I've had people tell me Hewlett-Packard, Sun Microsystems, Oracle, Microsoft, and AOL all have good reason to buy BEA and give IBM a good run for its money. Not one of these companies has stepped up with an offer.

    Microsoft could buy BEA for a sliver of its cash and turn the entire BEA portfolio into one giant .NET project, but it hasn't.

    It turns out that Oracle did take a look at BEA as part of a list of nine potential acquisition targets in April '03 but passed on BEA and began hunting PeopleSoft. This came out at the Oracle/PeopleSoft antitrust trial in San Francisco, where the government is challenging Oracle's $7.7 billion hostile takeover offer for PeopleSoft. The document is purported to list nine companies and provides a detailed list of the benefits and drawbacks to a deal for BEA Systems. I guess Oracle decided the drawbacks outweighed the benefits, otherwise they would have made an offer.

    As Oracle looked at BEA in April of 2003 BEA's stock bounced around $11 a share all month and closed at $10.70 on April 30, 2003. On June 25, 2004, the BEA stock closed at $7.98. That may not seem like a lot but it is. Think about it. A pack of cigarettes in New York City costs the same amount as one share of BEA.

    If you were in the market to buy a company, that's great news if you really liked the idea of owning BEA because BEA is currently on sale for about 25% off its April 2003 prices - that's an incredible savings. Even a billionaire would take notice of that figure because it's over $1,000,000,000 off! The places where I shop usually don't have such big savings.

    I know a billion dollars doesn't buy what it used to, but if you could buy a really good company and save a billion dollars wouldn't you?

    You would think some billionaire or deep-pocketed public company or private equity firm would be foaming at the mouth for this once-in-a-lifetime deal, but they're not. It seems the smart money is either waiting for BEA to go even lower or they just don't care.

    I know most of our readers could care less how low BEA stock may go, but if nobody wants to bet on BEA the company, why should anybody bet their business on BEA's software? An enterprise deployment filled with orphanware would be an incredibly painful experience to back out of.

    Consider the class action lawsuit against BEA Systems, from the law offices of Marc S. Henzel, that claims, "the WebLogic 8.1 Platform was far from revolutionary and was not selling as claimed."

    Or the Stull, Stull & Brody class action lawsuit that claims that BEA, "by issuing a series of material misrepresentations regarding BEA's business and prospects to the market between November 13, 2003, and May 13, 2004. As a result of these false statements, BEA's stock price traded at inflated levels during the Class Period, increasing to as high as $14 in early 2004, whereby the Company's top officers and directors sold more than $13 million worth of their own shares. Then on May 13, 2004, BEA reported disappointing first quarter results, citing the difficult selling environment and sales execution issues as the primary reasons. On this news, the Company's shares fell 30% to $8 per share." Yikes!! Attention billionaire shoppers, this is a 30% off sale.

    Then Wechsler Harwood LLP announced that it has filed a federal securities fraud class action law suit on June 25, 2004. "The action, entitled Stroh v. BEA Systems, Inc., et al., Case No. 04-CV-2562 (SC), is pending in the United States District Court for the Northern District of California as defendants, the company, its Chairman, President and Chief Executive Officer, Alfred S. Chuang, its Executive Vice President of Worldwide Sales, Charles L. Ill, and its President of Worldwide Services, Thomas M. Ashburn." Maybe Charlie Ill should have stayed at IBM?

    With nobody making a move on BEA no matter how low their stock goes and considering the seriousness of the class action lawsuits you have to ask, is BEA still a viable alternative to WebSphere.

    I wonder what Scott Dietzen, BEA's chief technology officer, talked about when he delivered his keynote at JavaOne? Did he have anything revolutionary to talk about?

    The author does not own any securities in any of the companies mentioned in this editorial.

    .   .   .

    For more on this issue, see the article on page 46.

    Related Links

  • Is BEA DOA? 
  • How Long Can BEA Survive, Industry Asks
  • Why WebSphere?
  • A Successful Ingredient Offers Choice
  • A Leader with New Customers
  • More Stories By Jacques Martin

    Jack Martin, editor-in-chief of WebSphere Journal, is cofounder and CEO of Simplex Knowledge Company (publisher of Sarbanes-Oxley Compliance Journal http://www.s-ox.com), an Internet software boutique specializing in WebSphere development. Simplex developed the first remote video transmission system designed specifically for childcare centers, which received worldwide media attention, and the world's first diagnostic quality ultrasound broadcast system. Jack is co-author of Understanding WebSphere, from Prentice Hall.

    Comments (14)

    Share your thoughts on this story.

    Add your comment
    You must be signed in to add a comment. Sign-in | Register

    In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.