BEA options re-statement hits $400m mark
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EVP loses his E BEA Systems will restate almost a decade's worth of earnings to the tune of nearly $400m thanks to misallocation of stock to employees.â¦
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BEA Systems Inc  said on  Thursday it is willing to sell itself for $8.2 billion, but the  price was rejected as "impossibly high" by Oracle Corp  , the only company that has publicly expressed interest  in the software maker.
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After shooing away Oracle Corp.'s $6.7 billion takeover bid, business software maker BEA Systems Inc. dug in its heels for a potentially disruptive battle with its largest shareholder, activist investor Carl Icahn.
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'This will hurt you more than it hurts me' Oracle let its $17 per share offer for BEA lapse yesterday, but activist investor Carl Icahn has demanded the middleware firm put the offer to shareholders anyway.â¦
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The real-estate investment trust recently bought an options position that equaled 4.3 percent of Sears, Roebuck shares - and announced that it had done so even though it wasn&#39;t required by law.
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Given the silence from the BEA Systems and Oracle camps early this week about Oracle's unsolicited proposal to buy its middleware rival, the community at large can only sit back and guess what might be the next scene in this drama.The two companies have been keeping quiet since last Friday's blockbuster revelation that Oracle was seeking to acquire BEA for $17 per share, or about $6.7 billion. Both have spurned requests this week for media briefings to elaborate on the issue.Undoubtedly, much is taking place behind the scenes, as aggressive Oracle seeks to add BEA to the impressive list of formerly independent companies it has acquired, which has included, among others, PeopleSoft and Siebel Systems. BEA, meanwhile, also has to be pondering its next step.Officials at Sun Microsystems, which invented the Java platform that serves as the backbone of many BEA and Oracle products, seemed to be caught off-guard when asked about the proposed merger at a Sun event in San Francisco on Tuesday evening.Chuckling, Rich Green, Sun executive vice president of software, suggested contacting Oracle CEO Larry Ellison about the matter. But when asked what impacts might be felt by the Java platform itself, Green did not see any negative effects."They're both Java supporters," Green said. "I think it's neutral to Java. I think it's just fine."Sun's James Gosling, a founder of Java and chief technology officer for Sun's client software group, concurred. "They're both big supporters of Java. I don't think it's going to have much effect one way or the other," Gosling said.Oracle has pledged to protect investments customers have made in BEA products. While Oracle's move has been characterized in some circles as a hostile takeover attempt, BEA's initial response merely said the Oracle offer undervalued the company.Major BEA stockholder Carl Icahn has been prodding for a sale of BEA, prompting one BEA insider to suggest Icahn did not have enough shares and would have a hard time getting control of the BEA board of directors in order to make the sale happen. Now, Oracle has forced BEA's hand. If history is any indication, the sale is likely to happen. PeopleSoft opposed Oracle but eventually succumbed."We certainly saw how persistent Oracle was in chasing PeopleSoft," said Dennis Callaghan, enterprise software analyst at the 451 Group, who expects the merger to be completed.Options for BEA to resist Oracle may be limited. To take the company private and avoid a merger, BEA would need to find a private equity partner, Callaghan said. And then there is Icahn, owning a significant stake in the company and wanting the company sold."It's not like [BEA CEO and co-founder] Alfred Chuang can regain control of the company and take it private. He's got to make his shareholders happy," said Callaghan.Even BEA employees could profit on a merger if they bought stock at a discounted price and then were able to sell it at an inflated price as a result of a merger, he said.? They might lose their jobs at BEA, but a lot of them would be very employable, winding up with startup ventures, he said.Callaghan added he expects Oracle to increase its offer. HP is a possibility as another potential buyer for BEA, but HP has had troubles of its own integrating acquired companies, such as Peregrine and Bluestone Software, Callaghan saidHe gave credence to the notion that Oracle may be buying BEA to stock up on its middleware offerings as the database market, which has been Oracle's cash cow, now features free, open source offerings from competitors.? "From what I understand, [databases is] not really a growing business at this point, Callaghan said.A dignitary in the Java development space had a mostly positive reaction to the proposed merger."Oracle and BEA both have amazing engineering teams, but Oracle's business operation is clearly many, many times the size and scale of BEA's," said Rick Ross, founder of the Javalobby Web site for Java developers. Having both teams under the same umbrella would create great opportunities for innovation, Ross said. And BEA's technology, such as the JRockit Java Virtual Machine, could become more widely used, he said.But there could be a down side, Ross noted."As the realized market share of a single player moves to such a dominant position, it becomes less and less likely that the startup innovator can gain a foothold," he said.IBM, BEA, and Oracle are battling in what research firm IDC calls the application deployment software space, which is comprised of application servers, integration software, message-oriented middleware and transaction processing monitors. This market space, valued at $9.4 billion in 2006, is growing at nearly 18 percent year over year because of trends in integration, business process management, and SOA, said Maureen Fleming, IDC program director.When including software mainframes, IBM last year had a 36 percent market share, valued at $3.3 billion. BEA trailed with 11 percent or $1 billion, and Oracle had 9 percent, or $850 million. The figures include license and maintenance revenuesWhen leaving out mainframe software, the market size dropped to $6.5 billion, with IBM still leading with a 20 percent market share, or $1.3 billion and Oracle garnering 13 percent or $850,000. BEA came in right behind Oracle with 12 percent or $840,000.
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Oracle rejected BEA Systems' proposed purchase price of $21 per share, calling it "impossibly high" for Oracle or any other company.
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This options strategy promises income, but at too high a price.
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Investment bank Morgan Stanley's  Chief Executive John Mack has been awarded a bonus worth about $40 million in stock and options for 2006, according to a regulatory filing on Thursday.
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BEA Systems&#39; largest shareholder is demanding that its board of directors allow shareholders to vote on a&#160;$17-per-share purchase offer from Oracle, which is set to expire at 5 p.m. Pacific Time Sunday.
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Market share and technology, a sometimes unbeatable combination, is the raison d'etre behind Oracle's acquisition of BEA, say several industry analysts. What Oracle wanted was access to the high-quality, large installed customer base that BEA owned. The high-end customers who use middleware for the most demanding applications are owned by either BEA or IBM, so this acquisition inches Oracle closer to IBM's scale, says Yefim Natis, a Gartner vice president. If the acquisition is approved by the SEC, it will still put Oracle in second place behind IBM as the leading application infrastructure vendor.But analysts differ as to whether the acquisition will mean a merger of the two companies' middleware into a refused Fusion, or that Oracle will instead offer two separate product lines, as it does with its acquired PeopleSoft and JDEdwards applications."When Oracle buys a company, it usually buy it because it has better technology that beat it in the market," Bart Narter, a senior analyst with Celent, a financial research and consulting firm. Narter said BEA's technology has some real advantages, especially in the securities industry, where firms are looking for low latency with performance in the single digit millisecond time frame to handle the huge volume of trades.But the biggest implication for IT is that the acquisition brings "best of breed" functionality into the middle layer of the Fusion platform, Narter said. It is likely that the next version of Fusion middleware suite will be a combination of both BEA and Oracle products, Natis said: "Users should not make the assumption that BEA products will be discontinued."For example, JRocket is the leading JVM, one that has significant extensions beyond the basics, said Gartner's Natis. It's an example of a BEA product that is complimentary to Fusion. "It is a no-brainer. JRocket is [one of] BEA's family jewels," he said. By contrast, Natis noted that Oracle's OC4J (Oracle Container for Java) is "an ordinary product" while JRocket is "arguably the best implementation of J2EE in the industry." He expects JRocket to replace Oracle's J2EE solution.Likewise, BEA earlier acquired Plum Tree Technology, which was considered the industry leading technology for BPM (business process management), another jewel that can be brought into Fusion, Natis said.However, analysts from both IDC and AMR see it differently. While BEA may be used to fill in gaps in the Fusion portfolio as Natis indicates, Dan Vesset, a senior analyst with IDC, believes Oracle will maintain the two independent, but competing product portfolios."We expect to see Oracle operate BEA as a key brand within its Fusion middleware portfolio. We do not expect too much in the way of product rationalization," Vesset said. Rather than delaying Fusion, Vesset said Fusion is on its own path. Where BEA has an offering that will help Fusion, it will be used and could even speed the introduction of Fusion, he added.Dennis Gaughan, a research director at AMR Research, agrees with Vesset, saying that some of the BEA tools could be used to accelerate Fusion middleware capabilities. Gaughan also said that Oracle has made it clear that Fusion middleware is the company's strategic middleware platform and will not be replaced by BEA's or any other acquired products. "Larry [Ellison] reiterated that this morning," said Gaughan.What most analysts agreed on is that the key to owning the enterprise's IT business will by owning the middleware that IT uses. "The middleware touches everything," said Natis, "it is the switchboard."
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BEA Systems said Monday that it would restate results to reflect expenses associated with misdated stock option grants.
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BEA Systems reiterated on Friday that it would not accept&#160;Oracle&#39;s $17 per share acquisition bid, and also said it would allow&#160;a deadline Oracle had set for Sunday 5 p.m. PDT&#160;to expire.In a public statement -- just the latest salvo in merger talks that have had a distinctly icy quality -- BEA&#39;s vice president of planning and development, William Klein told Oracle President Charles Phillips that the company&#39;s offer was &quot;unacceptable.&quot;&#160;BEA has said it would accept a $21 per share bid.That would result in an $8.3 billion price tag for the company, significantly more than Oracle&#39;s offer, which works out to $6.7 billion. BEA&#39;s stock was trading at about $16.80 per share midday Friday.&quot;As fiduciaries, our Board cannot endorse a proposal that it has concluded significantly undervalues BEA,&quot; Klein said in the statement. &quot;We therefore assume that your proposal will expire on October 28.&quot;An Oracle spokeswoman could not immediately be reached for comment.
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BEA Systems made good Sunday on its promise to let a 5 p.m. Pacific Time&#160;deadline expire on Oracle&#39;s $17-per-share offer to buy the company.The enterprise software maker&#39;s board of directors had already said publicly that Oracle&#39;s bid, which amounts to $6.7 billion, was too low.&#160;BEA instead named a price of $21 per share, which works out to roughly $8.3 billion.Oracle issued a brief statement Sunday that was terse in tone, but nonetheless did not rule out a future bid: &quot;The BEA shareholders should not assume that Oracle will renew its $17 per share offer in the future. Over time many things can change: BEA&#39;s business might materially weaken, the stock market can fall further from its recent record highs, or Oracle may have committed its capital elsewhere.&quot;A BEA spokesman could not immediately be reached for comment.Oracle has coveted BEA&#39;s customer base and share of the middleware market, but company officials called BEA&#39;s demand &quot;impossibly high.&quot;While Oracle&#39;s next move remains to be seen, other companies may look to acquire BEA.Burc Oral, president of the New England BEA User Group, brought up some oft-mentioned names -- HP, S- but said perhaps an unlikely suitor will emerge for the firm. &quot;I have always thought that stackwise, HP is a good candidate. I was also thinking about a sleeping giant, like Computer Associates. They have no overlap.&quot;Of course, there is still the possibility that Oracle will end up buying BEA after all, and perhaps soon.BEA&#39;s largest shareholder, billionaire Carl Icahn, has demanded the board allow shareholders to consider Oracle&#39;s bid.Icahn, who holds more than 58 million shares of BEA stock, said in a statement that he has filed suit in Delaware to force an annual shareholder meeting &quot;before any scorched earth transactions (such as stock issuances, asset sales, acquisitions or similar occurrences) take place at BEA, other than transactions that are approved by shareholders.&quot;The investor also accused BEA&#39;s board of intending &quot;to find ways to derail a sale&quot; and maintain control of the company.Icahn said BEA can avoid litigation if it conducts an auction sale, allowing shareholders to consider offers from the highest bidder.An Oracle purchase would prompt an uncertain future for BEA customers, according to Oral.&quot;I think the support and maintenance will be honored for at least three years [if Oracle buys BEA],&quot; he said. &quot;The issue is, what is the product development that is going to happen?&quot;Change wouldn&#39;t occur immediately under Oracle, but would subsequently do so in dramatic fashion, he predicted. &quot;For a year, BEA is going to sail as it is. Then there is going to be a major consolidation in the product space.&quot;Prakash Malani, a BEA user from the Los Angeles, California area, said sale talks come at a time when BEA&#39;s fortunes are middling.&quot;I believe they have excellent products that compete very well in the market place. However, their products are being commoditized, innovation is slowing down, and their big bet on SOA [service-oriented architecture] has yet to be paid off,&quot; Malani wrote in an e-mail message. &quot;They have missed [the] mark on some technologies like RIA (Rich Internet Application) and their top talent is being poached by companies like Google.&quot;
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Party like its 1999, multiplied by 53 A piece of prime web real estate, which set a price record at the height of the dotcom bubble, is being punted to potential buyers for up to $400m.â¦
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BEA Systems reiterates its stance that $17 a share is too low and is prepared to let the buyout offer expire Sunday.
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The nation&#39;s accounting rule maker decided yesterday that companies will have to begin deducting the value of stock options from their profits next year, reining