BEA plunges on future profit warning

The corporate software maker's stock drops after analysts downgrade their outlook for it.

2 min read
Shares of BEA Systems plunged as much as 54 percent today after nearly a half-dozen analysts downgraded their outlook for the company following its warning that global economic turmoil and lower capital expenditure is likely to adversely impact sales growth.

BEA stock tumbled nearly 50 percent or 13.06 points to 13.31, and was the most actively traded issue on the Nasdaq market this morning with 10.9 million shares changing hands. The stock has traded as high as 29.63 and as low as 12.5 during the past 52 weeks.

Among the influential investment banks to cut their rating on BEA are Credit Suisse First Boston, which downgraded the company to "buy" from "strong buy"; Banc Boston Robertson Stephens, which cut it to long-term "attractive" from "buy"; SG Cowen and Dain Rauscher Wessels, which both reduced it to "neutral" from "strong buy"; Goldman Sachs, which cut it to "market perform" from "recommended list"; and Piper Jaffray, which downgraded it to "neutral" from "buy."

The company posted revenues of $80.9 million, up 81 percent from $44.8 million for the same period last year. BEA reported that profits rose 88 percent to $7.9 million before charges in the third quarter. The firm posted earnings of 7 cents per share, which beat the 6-cents-per-share consensus that Wall Street analysts expected, according to First Call. This represent a 3-cents-per-share increase from the year-ago quarter.

During the quarter, BEA added more than 150 new customers, including more than 60 new BEA WebLogic customers. New BEA customers from around the world this quarter included Kaiser Permanente, GTE Data Services, and Genentech.

"Despite these very positive trends, we were impacted by developments in the worldwide information technology market," BEA chairman and chief executive Bill Coleman said in a statement. "In spite of our strong performance, we observed this quarter that the continued slowdown in Asia and worsening economic environment in the U.S. and Europe is lengthening the enterprise software sales cycle."

BEA is a provider of cross-platform middleware solutions for enterprise applications. BEA's products and services enable mission-critical, distributed applications to work seamlessly in client-server, Internet, and legacy environments.