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TheStreet Open House

BEA Systems Guides Year Higher

Updated from 5:13 p.m. EST

SAN FRANCISCO - Posting an earnings report Thursday for the first time in a year, BEA Systems (BEAS) projected strong revenue and earnings for the full year.

The San Jose, Calif., middleware company reported third-quarter revenue of $384.4 million, up 10.6% from a top line of $347.7 million a year ago. Year to date, revenue was $1.1 billion, compared to $1 billion for the same period a year ago.

Net income grew to $56 million, or 13 cents a share, from $35.1 million, or 8 cents a share, a year earlier.

Excluding items, EPS was 19 cents vs. 14 cents a year ago.

The stock was up 6 cents to $16.76 in after-hours trading.

License revenue dropped 1% year over year, while services revenue grew 18%.

The company's AquaLogic line, which is a newer type of middleware known as service-oriented architecture (SOA), grew 31% and now makes up 27% of BEA's total license revenue.

BEA projected fourth-quarter revenue of $420 million to $434 million, implying full-year revenue ranging from $1.52 billion to $1.53 billion. "At the mid-point of our fourth quarter guidance, our fiscal 2008 non-GAAP earnings per share would be 70 cents," Chairman and CEO Alfred Chuang said in a statement.

Analysts were projecting full-year 2008 EPS, less items, of 57 cents and revenue of $1.5 billion.

Chuang said on a conference call that fourth quarter operating margins, excluding items, would be 27% to 28%, compared to the consensus estimate of 22%.

The company announced its long-delayed shareholder meeting would be held Feb. 14, 2008. BEA extended the deadline for shareholder nomination of directors to Jan. 1.

Executives addressed Oracle's (ORCL) recently rejected offer of $17 a share for BEA only indirectly, when asked why the company views its valuation at $21 a share. "We look at the classical valuation techniques -- trailing and forward P/Es , multiples, comparable deals," cash flows and growth rates, said CFO Bill Klein. "The numbers triangulated on a pretty common point" around $21.

"We reported earnings that were over 500 basis points higher than ... the consensus numbers. So that did have a pretty significant impact on people's models," Klein said.

Thursday's filings bring BEA up to date on earnings reports, following its restatement of prior years' reports due to options backdating practices.

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