BEA Systems (BEAS) Plays with the Devil
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BEA Systems (Nasdaq: BEAS) is having a rare up day today (+2%), reversing its gradual deterioration since reporting what were considered strong third quarter results on Nov 15th. The main driver for the recent slide has been a fading of buyout hopes.
On October 12th, Oracle (Nasdaq: ORCL) offered to acquire BEA Systems for $17 per share. Shares of BEA immediately shot-up, and even surpassed the $17 offer price, closing the day at $18.82, on hopes of an even higher bid from Oracle or another. BEA snubbed its nose at the $17 per share offer, claiming they are worth much more. BEA publicly said they would start the bidding at $21 per share. The company found no takers and the offer from Oracle expired, with Oracle saying $17 would be as high as they would go. Another possible BEA bidder, HP (NYSE: HPQ), said they were not interested.
The events have left investors in BEA frustrated and unamused. They have since sent the stock back to the low $15s.
Carl Icahn, an activist investors and 13% shareholder of BEA, has been an advocate for a sale. He, like the company, thinks $17 is too low.
While the third quarter numbers (+59% Net Income Growth) for BEA clearly show why the company was holding out for a higher price, comments from tech-leader Cisco (Nasdaq: CSCO), that they have seen a slowing in spending from certain corporate clients, suggests the profit growth may be short-lived. And a potential US recession could put the company\'s profit picture at even more risk.
BEA may one day regret not taking the $17 from Oracle. But, if the company can manage to pump out one or two more strong quarters in the face of a slowing economy, Oracle, which has been successful in integrating its past acquisitions, will likely pay up.
On October 12th, Oracle (Nasdaq: ORCL) offered to acquire BEA Systems for $17 per share. Shares of BEA immediately shot-up, and even surpassed the $17 offer price, closing the day at $18.82, on hopes of an even higher bid from Oracle or another. BEA snubbed its nose at the $17 per share offer, claiming they are worth much more. BEA publicly said they would start the bidding at $21 per share. The company found no takers and the offer from Oracle expired, with Oracle saying $17 would be as high as they would go. Another possible BEA bidder, HP (NYSE: HPQ), said they were not interested.
The events have left investors in BEA frustrated and unamused. They have since sent the stock back to the low $15s.
Carl Icahn, an activist investors and 13% shareholder of BEA, has been an advocate for a sale. He, like the company, thinks $17 is too low.
While the third quarter numbers (+59% Net Income Growth) for BEA clearly show why the company was holding out for a higher price, comments from tech-leader Cisco (Nasdaq: CSCO), that they have seen a slowing in spending from certain corporate clients, suggests the profit growth may be short-lived. And a potential US recession could put the company\'s profit picture at even more risk.
BEA may one day regret not taking the $17 from Oracle. But, if the company can manage to pump out one or two more strong quarters in the face of a slowing economy, Oracle, which has been successful in integrating its past acquisitions, will likely pay up.
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