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Oracle Content Without BEA

BEA Systems on Thursday managed to top analyst estimates in its third quarter, as well as file several overdue financial reports with the Securities and Exchange Commission. But shareholders looking for a big payday from Oracle, or any other potential suitor, may be out of luck.

During a meeting with analysts Wednesday evening, CEO Larry Ellison said if Oracle were to make another offer for BEA, it would be for less than the $17 a share, or $6.7 billion, it originally offered last month, adding that "it looks like nobody is going to buy BEA."

BEA shareholders apparently concur.

BEA shares closed at $13.62 a share on Oct. 11, one day before Oracle moved in with its "friendly" takeover bid. The unsolicited offer ignited BEA shares, sending the stock up more than $4.50 a share, or 33 percent, to $18.15. But since the Oracle offer expired on Oct. 28, the stock has been in a gradual decline, slipping another 25 cents a share Friday afternoon to $16.45.

"At $17 a share, it was a highly accretive transaction," Ellison said, according to a Reuters report. "Why were we buying them? For the money. If we made another offer, the price would be lower."

Apparently unfazed by Oracle's hard-line stance, BEA posted a third-quarter profit of $56 million, or 13 cents a share, on sales of $384.4 million Thursday. The $384.4 million in sales represents an 11 percent improvement from the year-ago quarter. Excluding costs related to employee stock options, BEA earned 19 cents a share in the quarter, considerably more than the 14 cents a share most analysts had expected.

BEA CEO Alfred Chuang said the earnings report, combined with the submission of four quarters and one fiscal year's worth of delinquent financial results, prove the company did the right thing in rejecting Oracle's offer and asserting its fair market value is closer to $21 a share, or $8.2 billion.

"In spite of significant distractions during the quarter, the team did an outstanding job executing to our revenue plan and generating a strong pipeline of business opportunities as we head into our seasonally strong fourth quarter," Chuang said in a release. "These results demonstrate not only significant progress in operating profitability, we also believe they will materially impact how investors value BEA."

Reading between the lines, it's clear the investor Chuang most wants to impress is billionaire investor Carl Icahn, the company's single largest shareholder (roughly 14 percent of outstanding shares) and, at least initially, a vocal proponent of the proposed Oracle-BEA union. Last week, BEA took the unusual step of providing Icahn, who agreed to a non-disclosure agreement, details attesting to the company's overall financial situation.

It's worth noting that BEA, in documents filed with SEC on Wednesday, agreed to guarantee severance packages that will provide between three months and a full year of pay to full-time and most part-time employees who are fired within a year of any future takeover.

If that takeover does materialize, it's safe to say Oracle won't be the acquirer. Ellison's moving on, saying the company is "looking at our second favorite stocks" to acquire down the road.

Cowen & Co. analyst Peter Goldmacher said it's highly unlikely BEA is going to find a better offer.

"I think that makes 100 percent sense," he wrote in an e-mail to InternetNews.com. "He put the bid out at $17 and no one else bid. Why would he raise that bid? The market has spoken. [BEA] management is delusional."