Bea System Synopsis

BEA Systems produces infrastructure software and offers internet products and

deployment platforms. BEA is pioneer in the market for Java server software used to deploy business applications, competing with such products as IBM's WebSphere. Although the company operates in Europe, the Middle East and Asia, the United States is its primary market. The company's main headquarter is located in San Jose, California. Oracle Corporation, Microsoft Corporation and Sun Microsystems are some of BEA Systems chief competitors. (Marketline 2006, para. 1)

Despite introducing new product lines, new license revenue has been tepid or has declined over the past two years. CNN Money website reported BEA is still trying to recover from the mishandling of employee stock options. This has prevented the company from meeting regulatory deadlines to file quarterly and annual financial statements. According to Shankland, billionare investor Carl Icahn has been urging the company to put itself up for sell. Oracle Corporation, One of BEA Systems major competitors, offered to purchase the company for $6.7 billion last month. BEA Systems sees this as an undervalue offer of the company's worth and counter offered by demanding $21 per share or $8.2 billon.

According to the CNN Money website (2007), BEA recently threw a financial security blanket around its entire workforce of 3,800 employees. BEA guaranteed severance packages that will provide three months to 12 months of pay to full-time and most part-time employees who are fired within a year after a takeover.

After rejecting Oracle's offer, Ichan, the largest shareholder, suggested that BEA should allow its shareholders to decide the company's fate by conducting an auction sale process and allowing the shareholders to accept or reject a proposal made by the highest bidder. Icahn threatened to lead a lawsuit against BEA if the company attempts to "dilute voting" or tries in any other way to "derail