BEA seeks new areas of revenue
Published: 20 Aug 2007 15:44 BST
Software company BEA Systems plans to introduce a new set of products to extend its revenue possibilities, according to the company's chief executive Alfred Chuang.
BEA's second-quarter earnings, which the company reported on Thursday, exceeded analysts' estimates but did not allay concerns about the company.
The company said its revenues were $365m (£184m) in the latest quarter but it did not report earnings because of an ongoing review of its accounting. Services revenue was up, but its licence revenue was down nine percent.
Financial analysts said the consistent licence revenue slide has raised concerns about the company's competitive position.
Credit Suisse analyst Jason Maynard issued a report on Friday reiterating his earlier calls for a change of company management and ownership. BEA has been considered an acquisition target by larger software companies for the past few years.
"We are convinced the best path to maximising shareholder value is through the sale of the business. We don't see anything in the product portfolio that gives us confidence that the company can break the pattern of no licence growth over the past five years," Maynard said in his report.
Apart from acquisition by company within the IT sector, BEA could also be bought by a private-equity firm, many of which have become increasingly interested in technology companies.
BEA's Chuang said sales in the last quarter have stabilised and that the company is developing new products to help stimulate licence revenue.
"We've been embarking on work to introduce a new set of products, mostly geared to building new applications," Chuang said.
He said products will be based on its existing Aqualogic technology, and will address companies building new applications through mashups. Most customers are using a service-oriented architecture (SOA), to get data out of older mainframe applications, he said.
"The current SOA audience has what I call a high integration content. People want to assemble applications by getting data out of their legacy apps. [This new product] is more geared at building brand new stuff," Chuang said.
Despite the company's investment in new technologies such as enterprise mashups, Chuang said the company's primary competitor remains IBM in mainframe-related deals.
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