BEA Sales Up 11 Percent For First Quarter

BEA Systems posted solid first-quarter results for fiscal 2005, meeting Wall Street earnings estimates and growing its sales 11 percent year over year.

May 14, 2004

3 Min Read
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BEA Systems Thursday posted solid first-quarter results for fiscal 2005, meeting Wall Street earnings estimates and growing its sales 11 percent year over year.

For the first quarter ended April 30, BEA, San Jose, Calif., reported pro forma net income of $33.5 million, or 8 cents per share, on sales of $262.6 million. Estimates from Thomson Financial/First Call predicted BEA would earn 8 cents per share for the quarter. For the same time period last year, BEA earned $24.5 million on sales of $237.3 million.

Despite a strong quarter, pressure from chief competitor IBM seemed evident in BEA's results. The company's license revenue of $120.2 million was down 2 percent from $122.3 million a year ago. New analyst figures from Gartner and IDC in published reports this week showed that in 2003 IBM widened its lead over BEA in the vendor's core business, the application server market, though BEA is making some gains in the integration software space. In line with those estimates, BEA reported 15 percent year-over-year license revenue growth for WebLogic Integration in the first quarter, according to BEA Chairman, CEO and President Alfred Chuang.

Chuang also said in a conference call with analysts Thursday that sales in the Americas, which comprised 48 percent of first-quarter revenue, did not meet BEA's performance plan for the quarter. The figure usually hovers above 50 percent.

Chuang attributed this lack of execution to sales organization restructuring, including a new regional coverage model for midsize-business customers, which disrupted sales in the quarter. Chuang said BEA Executive Vice President of Worldwide Sales Charlie Ill will direct U.S. sales for the time being as a result of the disruption. Alan Fudge, senior vice president of Americas sales for BEA, has left the company to pursue other opportunities, according to Chuang.In addition, growth in BEA's partner efforts may have contributed to less-than-expected sales results in the United States, Chuang said. BEA in the quarter signed VARs ACS, Alpine Consulting, Anexinet, EBS, E2E Consulting, Helio Solutions, IBS, Kalos, Locus and Melillo Consulting through its partnership with distributor Agilysys.

Chuang said now that the new coverage model is in place and the sales organization has stabilized, he does not expect the changes to affect sales next quarter.

While BEA license revenue was down, services revenue was up 24 percent year over year from $115 million to $142.5 million in the first quarter. Customer support and license maintenance revenue, which is recurring yearly revenue rather than one-time revenue from a sale, also continued to grow, from $88 million in the year-ago quarter to $108 million in the first quarter, Chuang said.

BEA is getting ready to host its annual eWorld developer conference beginning May 24 in San Francisco, where the vendor expects 3,500 attendees. Chuang said service-oriented architectures (SOAs) will be a key focus of the show, with BEA unveiling a new vision, code-named Sierra, for helping customers and solution providers deploy SOAs, he said. SOAs are distributed architectures that deploy business processes and application components as services that can be invoked at will by other applications and processes in a system.

At eWorld BEA also will unveil an expansion to its Workshop and Controls Program, which enables ISV partners to build custom controls for WebLogic Workshop, BEA's visual J2EE and Web services development tool, Chuang said. The controls program is part of BEA's plan to proliferate its technology by giving as many developers as possible easy access to its software and tools.0

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