Updated from Aug. 2

BEA Systems warned after the bell Monday that it will miss revenue expectations and come in on the light side of earnings estimates for the second quarter.

BEA said it expects to report pro forma earnings per share of 7 cents or 8 cents on revenue ranging from $260 million to $263 million. Analysts polled by Thomson First Call were expecting a profit of 8 cents a share and revenue of $266.87 million. Including items, earnings will be about a penny lower.

The warning was hardly a surprise. "The worst-kept secret in software," joked analyst Tony Ursillo, an analyst with Loomis, Sayles & Co., which does not hold shares of the San Jose, Calif., company.

Indeed, in recent trading Tuesday, the stock was up 15 cents or 2.34%, to $6.56 a share, an apparent expression of relief that the news wasn't any worse. With about 14.7 million shares traded of late, volume has already exceeded the three-month daily average of 10.3 million.

Ursillo believes BEA's problems are probably related more to internal company issues than to the economic climate. He noted that the stock is cheap, having dropped from around $11 three months ago. "But cheap and not growing isn't a winning combination long-term," he said.

Although the miss was relatively small on the revenue side, a number of analysts noted that consensus has dropped in the last few weeks as news of the problematic quarter spread.

License revenue is expected to range from $115 million to $117 million, the company said. Although First Call does not collect license revenue estimates, several analysts said they were expecting the company to at least better the $120 million in license revenue recorded in the first quarter.

In a note to clients published Tuesday, First Albany Analyst Damian V. Rinaldi, wrote: "We think the company's shares are fairly valued at current levels, but we remain concerned about the firm's ability to drive license growth. While we have made adjustments to our model for the second quarter of fiscal 2005, we expect to have to reduce expectations again for the fiscal third-quarter, the full fiscal year of 2005, and for fiscal year 2006 as well." First Albany does not have an investment banking relationship with BEA.

Several sell-side shops have issued critical notes recently, including a particular blistering one by longtime BEA critic Trip Chowdhry of FTN Midwest Research, who speculated that the company is searching for a replacement for CEO Alfred Chuang.

BEA refused to comment on the rumor, but a source close to the company said Chowdhry's assertion was "ridiculous."

Chowdhry, whose company does not have an investment banking relationship with BEA, said he expects the maker of the widely used WebLogic application server to lower guidance for the third quarter when it reports earnings on Aug. 12.

Gary Abbott of Merriman Curhan Ford lowered his estimates last week and said the departure of Adam Bosworth, the company's chief architect, "may only be the first of a few executive departures." (MCF does not have a banking relationship with BEA.)

In a prepared statement, Chuang said: "We made good progress in improving our overall execution in the quarter. We were able to deliver reasonable results, given the continuing difficulty in the worldwide IT spending environment."

In an admission that it is not immune from the industrywide slowdown, BEA said the warning was prompted by "the recent preannouncements throughout the software industry," including by PeopleSoft ( PSFT) Veritas ( VRTS - Get Report) Computer Associates ( CA) and BMC Software ( BMC).