How BEA got its groove back
The middleware seller is out in front again, thanks to well-timed new products that offer new ways to build software.
By Owen Thomas, Business 2.0 Magazine online editor

SAN FRANCISCO (Business 2.0 Magazine) - It's not easy being the man in the middle.

And that's long been BEA Systems' position. Its so-called "middleware" technology makes it easier for programmers to hook together software applications, databases, and Web servers. And it's under siege by IBM (Research), Oracle (Research), and Microsoft (Research), all of which would like to own the lucrative middle ground of software.

But BEA (Research) has figured out a way to get out of that scrum: Its new AquaLogic software, which taps into some of the hottest trends in programming today.

On Wednesday, the company reported earnings of $35.3 million, 50% higher than Wall Street expectations, thanks in part to surging AquaLogic sales.

AquaLogic lets programmers write code that follows a programming strategy known as "service-oriented architecture," or SOA. The premise of SOA is that applications should connect with each other following simple standards, passing data back and forth in defined ways that any SOA application can tap into rather than through hard-coded connections, and to reuse code rather than forcing programmers to write largely similar applications over and over again.

Write once, run everywhere

AOL, for example, used AquaLogic to build an application it uses when customers sign up for its new nationwide broadband service. AOL has to pass customer information to dozens of local phone companies to offer nationwide DSL service. (AOL, like CNNMoney.com, is owned by Time Warner (Research).)

Writing a custom application for each phone company would have been cost-prohibitive, so instead, AOL used AquaLogic to write one SOA application that connects to all of its DSL partners in a standard way.

But SOA's cool factor isn't the only reason why customers are snapping it up. Jason Maynard, a research analyst for Credit Suisse, says that BEA's resurgence has to do more with the fact that its customers in financial services and telecom, buoyed by a resurgent economy, are writing in-house software again.

"A lot of BEA's customers are investing in a refresh of their infrastructure," says Maynard. SOA is seen in the technical community as the newest, smartest way to write code, and so companies who are developing new applications to support their growth plans are snapping up SOA tools like AquaLogic.

Maynard, who put a Buy recommendation on BEA in January when the stock was trading at $10, thinks the stock could run up to $16, his current price target, from its Thursday closing price of $13.33.

While that's a far cry from the stock's bubble-era height of $89.50, it's not bad for a company whose shares spent 2005 in the single-digit range.

For BEA, the middle could again be the right place to be. Top of page

To send a letter to the editor about this story, click here.

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.