In BEA Systems' (NASDAQ:BEAS) second-quarter report, there was an 18% increase in earnings year over year amid an environment of reduced information technology spending. Although license revenue declined slightly from last year, yesterday's report resulted in a vote of confidence from investors, with BEA Systems up 5% in trading today.

The stock had halved in value since the beginning of the year, with a drastic drop in May when the company missed its first-quarter guidance for licensing revenue, which is widely used as a barometer in the software industry to measure new business. The departure of Chief Technology Officer Scott Dietzen and Chief Architect Adam Bosworth also sparked fears of a brain drain.

Intense competition from both ends has not helped the market's perception of BEA Systems either. Web services is a very hot market right now, and BEA Systems has rivals such as offerings from bigger companies IBM (NYSE:IBM) and Oracle (NASDAQ:ORCL) and open-source products such as JBoss and Apache. Despite the heated competition, BEA Systems added 488 new customers in the second quarter, with 18 licensing deals worth more than a million dollars each.

In my opinion, the market overreacted to BEA Systems' disappointing first quarter. The enterprise software market is noted for inconsistent sales numbers, with large deals at irregular timing leading to fluctuations in revenue per quarter. The sell-off of BEA Systems on the basis of one bad quarter was thus shortsighted on the market's part, especially when it followed a strong fourth-quarter showing.

At its current undervalued price of around $6 a pop, BEA Systems looks ripe for acquisition. Rumors of a buyout were rife even when its shares were worth $14 in January. The company has already been identified by Oracle as a potential target. Its second-quarter results ease the doubts its first quarter may have introduced, and with two dollars a share in cash, BEA Systems at its current level is a steal, whether or not a buyout takes place.

Fool contributor Tim Goh does not own any stake in the companies mentioned.