When you invest in any company, it's important to have a good understanding of what it does and how it makes its money. That's sometimes easier said than done with technology firms, such as BEA Systems (NASDAQ:BEAS), which recently reported its third-quarter earnings.

Consider how BEA Systems describes itself:

BEA Systems, Inc. is the world's leading application infrastructure software company, providing the enterprise software foundation for more than 15,000 customers around the world, including the majority of the Fortune Global 500. BEA and its WebLogic and Tuxedo brands are among the most trusted names in business. Headquartered in San Jose, Calif., BEA has 77 offices in 31 countries and is on the Web at www.bea.com.

Got that? No? Well, here's a clearer explanation, from Hoovers.com:

The company is a leading provider of application server software used by software developers to establish platforms (which span mainframe, client-server, and Web-based environments) upon which software applications run. Its products enable companies to create and deploy platforms that support functions such as transaction processing, billing, customer service, provisioning, and securities trading.

In other words, BEA Systems is one of those "business-to-business" enterprises that sell not to individual consumers, but to fellow corporations. Here's a quick overview of its recently reported results:

  • Earnings were up 17% to $29 million, from $25 million last year. If you disregard acquisition-related expenses and focus more on continuing operations, earnings were $34 million.

  • About half the company's revenues come from licensing fees, which rose just 2%, while services, which contribute the other half of revenues, jumped 15%. Total revenue advanced 8% to $252 million, with the company expecting to take in between $260 million and $270 million in the coming quarter.

  • The company pointed to "continuing challenges in the IT spending environment,'' meaning that, in general, companies aren't shelling out gobs of money for computers and related services.

  • BEA Systems's WebLogic Enterprise Platform is doing fairly well.

Investors might want to read up on BEA Systems, but don't rush in to buy without some careful consideration. Its price-to-earnings (P/E) ratio is currently in the 50s and has varied between the 20s and 90s throughout the year. That might seem steep, but in the go-go days of just two years ago, its P/E topped 2,000. See what others are saying about the firm on our BEA Systems discussion board by taking advantage of our boards' free trial.