Updated from 9:50 a.m. EDT

Financial analysts who follow

BEA Systems

(BEAS)

frequently sum up their opinions of the hard-pressed company with two words: "Show me." And on Thursday, the software vendor will attempt to do just that as it shows a skeptical Wall Street another component of its long-term effort to broaden its business beyond the slow-growing application server market.

BEA, a company whose highly technical software is well regarded in the technology industry but little known outside of it, is plunging into the highly touted market for Web services with a series of products code-named Freeflow. Simply put, Web services tie together different applications and data sources into a single, reusable piece of software that allows a business to complete a complex process or transaction without writing a new program.

That may sound like a fanciful remnant of the dot-com boom, but all of the major enterprise software companies are embracing service-oriented architecture, or SOA. "No vendor will succeed without a solid offering in this space," says Yefim Natis, an analyst and vice president at market researcher Gartner. Rival researcher IDC puts the value of the total SOA market at $9 billion by 2009. BEA's piece of it -- infrastructure to support the services -- is smaller, but still potentially quite large.

Although the technology behind QuickSilver (the heart of Freeflow) is very complex, the business problems it is designed to solve are readily understandable. Scattered records residing in multiple databases have to be pulled together for use by different applications. Making that even harder is the need to confirm not only the identity of the person requesting the information, but his or her level of access. All of which can be done now, but slowly and at great expense.

Goldman Sachs analyst Rick Sherlund upgraded the entire software sector last month, saying "the emergence of a new Web services architecture is now clearly visible on the horizon and will likely begin to accelerate industry growth over the next two to three years, leading to higher valuations for the leading software vendors." Sherlund did not point to BEA as a major beneficiary, but his analysis gives the company's new direction additional credibility.

BEA needs the lift.

Despite

strong sales in the first quarter, the company failed for the fifth quarter in a row to show a year-over-year gain in license revenue. More fundamentally, its core market for application servers has slowed to a crawl, growing by only 2% a year, according to IDC analyst Dennis Byron. And the company is being attacked at the high end by

IBM

(IBM) - Get Report

and

Oracle

, and at the low end by open-source vendors such as

JBoss

.

The stock has run up strongly since sinking to $6.06 in August, but has been flat over the last 12 months and is off 4% so far this year. If BEA doesn't begin to grow again fairly soon, pressure to merge with a larger company is likely to grow.

BEA's management, which doesn't seem interested in being taken out, has now launched two major initiatives to grow beyond its WebLogic application server and other offerings. Earlier this year, it unveiled Project DaVinci, a suite of products and tools to help telecommunications companies build VoIP (voice-over-Internet protocol), multimedia and wireless services.

DaVinci has gotten a good reception on Wall Street. Even analyst Robert Stimson of WR Hambrecht, a self-described BEA bear, thinks VoIP-related software and services could pull the company out of its doldrums, and he recently upgraded his rating to buy. He says big telcos who are potential DaVinci customers are still testing it. "I'm hearing from my contacts that it is going well," he says. Stimson figures that revenue from the deployments should hit the income statement by January. "If not, I made a bad call," he says.

But he gives thumbs down to the company's QuickSilver SOA offering, which he doesn't consider a likely driver of revenue. "People are confusing methodology with products." Hambrecht does not have an investment banking relationship with BEA.

Similarly, Gary Abbott of Merriman Curhan Ford is unimpressed with the potential of SOA to help BEA. "It's a big company and I don't think an additional $25 million to $50 million in revenue -- which is achievable -- is enough to move the needle," he says.

But like Stimson, Abbott is excited about BEA's chances in VoIP and telecom services. "It could be $500 million in revenue

for BEA in five years," he says. He also thinks that BEA has probably seen the worst of the hits to its license revenue line and expects improvement in the near future. Merriman does not have an investment banking relationship with BEA.

However, industry analysts who have been pre-briefed about QuickSilver and its related security and identity-management products are more positive than their Wall Street colleagues. "QuickSilver is something IBM's SOA offerings don't have," says Shawn Willett of Current Analysis, a Stirling, Va.,-based research firm. He thinks the $9 billion market estimate is too high, but says, "it could certainly be a healthy market."

And IDC's Byron says QuickSilver offers a key building block for much of what's new in the software world, "and BEA is well-positioned to do it."

If he's right, don't expect BEA's revenue to jump immediately. Even Bill Roth, BEA's vice president of product marketing, says it will take 18 months or more for SOA to really take off for the company. For now, BEA has to convince those skeptics on Wall Street that it has a real story to tell.