BEA Shares Drop on Forecast Warning

Following its warning that its fiscal first-quarter sales would fall short of estimates, BEA's shares drop.

Shares of BEA Systems fell more than 9 percent a day after the middleware maker warned that its first-quarter revenue projections fell short of estimates.

BEA, of San Jose, Calif., on Feb. 22 said it expects revenue to come in between $350 million and $364 million, while analysts forecast revenue of $364.7 million.

The company also said its fiscal fourth-quarter sales were $391.8 million, up 15 percent from a year ago. However, the company said it was not giving earnings results due to an ongoing internal probe of past stock-option accounting practices.

Earlier in February, BEA announced a voluntary internal review of BEAs historical stock option grants, which has been conducted by the Audit Committee of BE s Board of Directors with the assistance of independent legal counsel, Simpson Thacher & Bartlett LLP.

"The outcome of that review will require us to change our accounting treatment of certain stock option grants, which will have a material adverse effect on our results of operations for certain historic periods and may have a material adverse effect on our results of operations for the fourth quarter, fiscal year and certain subsequent periods," BEA said in a statement.

/zimages/6/28571.gifClick here to read more about BEAs SOA efforts.

"Following the review, the Audit Committee and the Board of Directors expressed their continued confidence in the leadership and integrity of BEA chairman and chief executive officer Alfred Chuang and the current Executive Leadership Team," the statement said.

The findings of the internal review showed various stock irregularities, causing key BEA executives to re-price their options and, in some cases, pay back the company for gains made on options.

The executive involved include BEA co-founder Chuang; BEA co-founder William Coleman; BEAs former chief financial officer and current executive vice president of business planning and corporate development; and Mark Dentinger, BEAs executive vice president and chief financial officer.

Meanwhile, "AquaLogic and BEA s SOA [service-oriented architecture] services continued to drive new customer opportunities this quarter," Chuang said in a statement.

"Led by our enterprise service bus and business process management products, AquaLogic revenue grew rapidly, represented 25 percent of fourth-quarter license revenue and exceeded $110 million in license revenue in its first full fiscal year on the market. AquaLogic is driving key SOA wins in competitors accounts, because AquaLogic can seamlessly coexist with our customers existing systems and because customers own benchmarks demonstrate that AquaLogic delivers the goods."

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