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Contributors: Douglas McIntyre Jon C. Ogg

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Wednesday, August 23, 2006

BEA Systems Buying Flashline...Will BEA Stay Independent?

BEA Systems (BEAS) has not been on the BAIT SHOP for a while now because of valuations, but it has been on and off the BAIT SHOP list before and we have noted that the company has been a would-be and rumored takeover target stock since literally the late 1990's. At 11:00 AM EST this morning the company made an announcement that it was acquiring a smaller company for undisclosed terms named Flashline, Inc.

Here are the guts of the news: BEA Systems continues to execute against its vision; the enterprise metadata repository is a key component of the Company's strategy to deliver to customers the industry's most unified SOA platform. - BEA Systems extends its BEA AquaLogic(TM) product family with the acquisition of Flashline; The Flashline(R) repository will serve as the basis for providing a more unified environment for SOA across the BEA product portfolio. - The combination of BEA AquaLogic(TM) Enterprise Repository and the Flashline repository provides enterprises with the capability to manage and govern their enterprise assets across the entire SOA lifecycle.

What is interesting is that this "may" mean that BEA Systems doesn't think a worthwhile offer or a deal for the company is coming. IT and software companies that are already involved in mergers tend not to be targets themselves, although you can probably find 5 ot 7 out of any 12 people you know who may disagree with that statement. We'll have to see what they say in their conference call to determine if this is sizeable or anything that will take much effort from the company.

BEAS is still off the Bait Shop since it already met and surpassed the "perceived valuation" targets, but that was before the recent wave of software and IT mergers that have been announced. Maybe it is time to rethink the situation, but for now we are remaining on the sidelines as far as the BAIT SHOP strategy is concerned.

Shares of BEAS are now down 0.7% at $12.96 after having been as high as $13.25 earlier in the day. The year-high on this is $14.29, well above the $8.09 low.

Jon C. Ogg
August 23, 2006

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