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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
  • About Jacques Martin
    Jack Martin, editor-in-chief of WebSphere Journal, is cofounder and CEO of Simplex Knowledge Company (publisher of Sarbanes-Oxley Compliance Journal, 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.

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    Reader Feedback: Page 1 of 1

    "Should we expect news on more high level departures this week? Who knows"

    They postponed this news until today:

    BEA Systems market chief quits
    Tod Nielsen to leave company this week

    "Any inaction by BEA management would cause continuing departures of both employees and customers.

    BEA technology remains some of the best in the industry. Although BEA customers are not in any immediate danger, Gartner recommends that they delay new large-scale strategic commitments to BEA until the company''s long-term strategy becomes clearer.

    Analytical Sources: Yefim Natis and Joanne Correia, Gartner Research"

    Should we expect news on more high level departures this week? Who knows

    Interesting blog commentary (especially the comments) on the origins of sys-con''s negative coverage of bea this year

    This appeared in CRN''s Breaking News section...

    By Elizabeth Montalbano, CRN
    10:37 AM EDT Fri. Aug. 06, 2004
    Solution providers and industry analysts are wondering what in the world is going on at BEA Systems.

    When BEA revealed major organizational changes last week, the San Jose, Calif.-based software company--one of the most influential vendors in the Java application platform market--compounded confusion about its already shaky channel efforts and created even more uncertainty about its future.

    "I am worried about [BEA]," said Joe Lindsay, CTO of eBuilt, a Costa Mesa, Calif., solution provider. "They have great technology, but they often leave me scratching my head wondering what is going on and how do I work with them."

    Low class opinion piece worthy of this campaign season. It''s one thing for a sales rep to engage in competitor bashing and spreading FUD; it''s quite another thing to do it in a presumably professional technical publication.

    On another note: it''s a small industry where everybody knows everybody. As Scott and Adam show, it''s "here today, another company tomorrow." It''s a bit myopic on the author''s part to put out drivel like this--and especially side with the lawsuit--when who knows for what new master he''ll be blowing his trumpet next year.

    I''m in over my head.

    JBOSS is taking share, Oracle is taking share, IBM is taking share, I''m being sued, I''ve run the good sales people out of the company;my ego ran the technical visionaries out -Calgon take me away.

    I''ve got great integrated products but companies are scared to invest in my company.


    They are not phony press releases from securities litigation firms, they are real.

    The point is application servers are a business decision first and from a business point of view it does not look very good for BEA.

    The reason I feel technical people should be aware is, if BEA continues to slide a whole lot of companies and people will be left in the lurch. Every penny their stock goes down makes mergers progressively more unlikely.

    Technology is not religion it is business and the business people are speaking loudly by not making a move on BEA as is the Wall Street crowd by bidding the stock down.

    The reality is simple IBM has won, game over.

    "What are the editors thinking ..." The author of this piece of crap is the Editor! How do we short sys-con media?

    Sys-con reaches a new low in vacuous journalism with this "content-free" article. Lets make up phony press releases from securities litigation firms, string them together with some stock price quotes and publish them in a programmers journal. What are the editors thinking !?!

    IBM is a fine company, but this article is rather self-serving to the Websphere cause.

    IBM has won ? who knows, if BEA goes under, may be they will open source WebLogic and give JBoss a run for their money !

    I just don''''t see why anyone would want to buy BEA. I personally believe that they will die of the squeeze play. Microsoft is happy to eat them up with their own technology, one bite at a time. There is nothing BEA has that Microsoft needs. On the other side of the squeeze play is Eclipse/Apache/JBoss renderingthe J2EE upfront cost irrelevent. The people buying IBM are the ones who want to buy an insurance policy for their apps on the high end of scalability. The people buying .NET are buying insurance for the mid-market apps. BEA will simply become a loosely knit group of open source developers or IBM employees after they disolve.

    Websphere is having the upper hand only because it is essentially free for their customers. If the software is a screaming sale, how can the software division is missing its target again? Websphere is probably going to outlast Weblogic, not because of its'' technical merite, but because of IBM''s deep pocket.

    Your comments can at best be termed prejudiced.
    WebSphere lacks one major thing which BEA does very well.It gives a very tight, integrated offering.

    Its not a basket of "XXXX" products for which you need IBM consulting to make much sense out of.

    Being a user/customer of both the products (My first App server was WebSphere not Weblogic.) this much I will vouch for.

    All Time Low for Syscon Media and WebsFUD Journal

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