BEA Systems Still in Hide & Seek Mode (BEAS)

Investors have to wonder about BEA Systems Inc. (BEAS) after yesterday’s earnings announcement.  The company slightly exceeded revenue targets with $345.8 million, but its ongoing options review has yet again prevented it from wanting to report earnings. 

To top it all off the company announced it was expanding its share buyback plan by $500 million to a new total of approximately $620 million.  Either the SEC or the NASDAQ should step in and tell these guys they can’t do one single thing until they get their financials in order and get caught up.  This was either he third or fourth "no earnings today because of our options review" and in a real world this stock should have to change its stock ticker to a "BEASD."  That would make them get current.  The obvious fact is that they are buying more and more time to let all the options issues with the SEC blow over so they don’t get caught up with penalties that would be worse than a slap on the wrist.

Things don’t sound that great either.  Alfred Chuang, BEA’s founder and Chairman/CEO started out his quotes as follows: ""In the first quarter, we saw a tough selling environment in the Americas, and we made several changes to the Americas field organization. We aligned the organization correctly for the SOA opportunity; however, the changes impacted us in the short-run beyond our expectations……" 

The total cash is currently listed as $1.286 Billion, up about 16 million from the same quarter last year.  The problem is that they do not disclose liabilities or other assets because they are so delinquent in filings.  The days sales outstanding is now 79 days, up from 68 days outstanding last year.

BEA Systems is one we have noted as one that a buyer would look at depending on the price and depending upon the company’s willingness to do it.  This buyback will deplete cash if it goes through, and what is becoming more and more obvious is that the charges from the options review are not going to be large.  They are probably huge and who knows what sort of fines might be involved.

Here is the older data with the notation that even after a drop, it still might not be any closer to getting a bid.

Jon C. Ogg
May 17, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.