The SOA implications of Oracle's BEA purchase

SOA News : The SOA implications of Oracle's BEA purchase By Rich Seeley

This fall, leaves will turn bright colors in New England, Americans will elect a new president and what Oracle Corp. plans to do with BEA Systems Inc. after the $8.5 billion acquisition closes may be clearer.

Until then little is certain beyond the "do-the-math" facts that BEA shareholders, led by investor Carl C. Icahn, will make money on the sale and Oracle, led by CEO Larry Ellison, expects to make money from BEA's continuing software licenses and sales.

At a teleconference to announce the deal on Wednesday, Ellison said Oracle expects BEA software sales and license fees to increase Oracle's earnings per share by one to two cents per share in the first 12 months after the deal closes. That apparently assumes that BEA revenues will be robust even if there is a U.S. economic recession.

Dana Gardner, principal analyst of Interarbor Solutions LLC., suggests that recession fears may have played a role in convincing a reluctant BEA board of directors to accept Oracle's offer, which amounted to $19.38 cents per share in cash for shares that closed Tuesday on the NASDAQ stock exchange at $15.58. With the stock markets closing lower almost every day, there may have been a sense that this was going to be as good as it would get perhaps for several years.

"Just fear of a recession has whacked tech stocks, so it would be harder for BEA to hold out for more from any buyer for next year or two," Gardner said. "Second, BEA needs to show strong growth in revenues, especially new licenses, to validate the higher price it was seeking. Next one or two quarters might not work out to prove that in a recessionary or fearful climate."

With no other buyer appearing interested and Oracle offering a cash price significantly higher than the recent share closing in a market spiraling downward, Icahn, who owned 13 percent of BEA shares may not have wanted to risk a prolonged holdout.

"So the recession or just fear of recession made BEA's notions of getting much more than Oracle was proposing less and less likely," Gardner said. "Plus, we can assume that activist investor Carl Icahn also saw the writing on the wall for tougher times and probably put added pressure to sell when an Oracle deal was possible."

Source: For more informaiton on Service Oriented Architecuture SOA news, "The SOA implications of Oracle's BEA purchase" visit http://searchsoa.techtarget.com/news/article/0,289142,sid26_gci1294494,00.html