Every couple of months seems to bring a new buyout rumor for BEA Systems
BEA develops "middleware," which helps companies manage e-commerce and other complex tasks. It's a solid business, but the company is having trouble branching into new categories.
Late last week, BEA announced its fiscal Q2 results. Revenue increased 7% to $364.6 million, and the company signed deals with big-name clients such as Chevron
One big red flag hung over the quarter: a 9.4% drop in license revenue, to $123.1 million. Keep in mind that this follows a 13% drop in Q1. On the conference call, CEO Alfred Chuang was confident that new product launches will turn this trend around. But he's been saying similar things for years, to mostly lackluster results.
It seems reasonable to expect that shareholders would want a buyout, but with the meltdown in the private equity market, a leveraged one probably isn't likely.
However, the company does have several major potential strategic buyers, such as Oracle
To spur things along, we may even see hedge funds rattle BEA's cage. For example, activist shareholder Carl Icahn owns roughly 7.9 million shares of the company, according to recent SEC filings.
While it's impossible to predict these things, I suspect shareholders will put ever-greater pressure on BEA to sell. But if history is any indication, I think management will ignore the noise, making any successful buyout far from easy.
Further BEA-tific Foolishness: