1031798--11/15/2007--BEA_SYSTEMS

related topics

{financial, litigation, operation}

{customer, product, revenue}

{stock, price, operating}

{product, market, service}

{control, financial, internal}

{personnel, key, retain}

{system, service, information}

{property, intellectual, protect}

{regulation, change, law}

{acquisition, growth, future}

{cost, operation, labor}

{tax, income, asset}

{stock, price, share}

{operation, international, foreign}

{cost, contract, operation}

{provision, law, control}

{operation, natural, condition}

We have experienced in the past, and may experience in the future, significant fluctuations in our actual or anticipated revenues and operating results, which has prevented us in the past, and may prevent us in the future from meeting securities analysts or investors expectations and result in a decline in our stock price. Our quarterly revenues, expenses and operating results are difficult to forecast because of the volatility of our license revenues. The seasonality of our sales typically has a significant adverse effect on our revenues in our first fiscal quarter. The lengthy sales cycle for our products makes our revenues susceptible to substantial fluctuations. We have restructured, and may in the future restructure, our sales force, which can be disruptive. Any failure to maintain on-going sales through distribution channels could result in lower revenues, and increasing sales through distribution channels could result in lower margins on our license revenues. If we do not compete effectively with new and existing competitors, our revenues and operating margins will decline. Because the technological, market and industry conditions in our business can change very rapidly, if we do not successfully adapt our products to these changes, our revenue and profits will be harmed. If the markets for application servers, application platforms, application integration, portal, BPM, SOA and related application infrastructure software and Web services decline or do not grow as quickly as we expect, our revenues will be harmed. Our revenues are derived primarily from a single group of similar and related products and related services, and a decline in demand or prices for these products or services could substantially adversely affect our operating results. If our WebLogic Communications Platform, AquaLogic and other recently introduced products do not achieve significant market acceptance, or market acceptance is delayed, our revenues will be substantially adversely affected. If we fail to adequately protect our intellectual property rights, competitors may use our technology and trademarks, which could weaken our competitive position, reduce our revenues and increase our costs. Third parties could assert that our software products and services infringe their intellectual property rights, which could expose us to increased costs and litigation. If our products contain software defects, it could harm our revenues and expose us to litigation. If we do not maintain our relationships with third-party vendors, interruptions in the supply of our products may result. Our international operations expose us to greater management, collections, currency, export licensing, intellectual property, tax, regulatory and other risks. Changes in accounting regulations and related interpretations and policies, particularly those related to accounting for stock options and revenue recognition, could cause us recognize lower revenue and profits or to defer recognition of revenue. Unanticipated changes in our effective tax rates or exposure to additional income tax liabilities could affect our profitability. If we are unable to manage our growth, our business will suffer. We may lose key personnel or may not be able to hire enough qualified personnel, which would adversely affect our ability to manage our business, develop and acquire new products and increase revenue. If we cannot successfully integrate our past and future acquisitions, our revenues may decline and expenses may increase. We face risks in connection with Plumtree s government contracts which may adversely affect our results of operations. Some provisions in our certificate of incorporation and bylaws, as well as a stockholder rights plan, may have anti-takeover effects. The ongoing U.S. military activity in Iraq and any terrorist activities could adversely affect our revenues and operations. An unfavorable government review of our income and payroll tax returns or changes in our effective tax rates could adversely affect our operating results. Stock Option Review Risk Factors The Audit Committee s conclusion that certain historical stock option grants were not accounted for correctly has had, and could continue to have, an adverse effect on our financial results. The Audit Committee s review of our historical stock option grant practices, together with the preparation of the resulting financial restatements, has consumed considerable amounts of Board member and management time and caused us to incur substantial expenses, which have had and could continue to have an adverse effect on us. The ongoing government inquiries relating to our historical stock option grant practices are time consuming and expensive and could result in injunctions, fines and penalties that may have a material adverse effect on our financial condition and results of operations. As a result of the matters identified by the Audit Committee s review of our historical stock option grant practices, we have failed to comply with SEC reporting requirements and Nasdaq listing requirements and may continue to face compliance issues with both. The continued failure by us to remain in compliance with SEC reporting requirements and Nasdaq listing requirements would likely have a material adverse effect on the Company and our stockholders. We have been named as a party to a number of shareholder derivative lawsuits relating to our historical stock option grant practices, and we may be named in additional lawsuits in the future. This litigation could become time consuming and expensive and could have a material adverse effect on our business. We are subject to the risks of additional lawsuits in connection with our historical stock option grant practices, the resulting restatements, and the remedial measures we have taken. If we fail to maintain effective internal controls or remediate any future material weaknesses in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud which could have an adverse effect on our business and operating results and our stock price. Failure to comply with applicable corporate governance requirements may cause us to delay filing our periodic reports with the SEC, affect our Nasdaq listing, and adversely affect our stock price. It may become more difficult and costly to obtain director and officer insurance coverage due to the results of our stock option review. Risks related to the Recent Acquisition Speculation and Investor Actions Despite recent acquisition speculation and investor actions, a merger, acquisition or other transaction involving us may not occur or may occur at a price per share of our common stock that is below the current trading price, which could harm our stock price. General customer uncertainty related to acquisition speculation and investor actions could harm our business. Acquisition speculation and investor actions could cause us to lose key personnel, prevent us from hiring additional key personnel and distract our management, which could harm our business. We have been named in various stockholder and purported stockholder class action lawsuits for various matters related to the recent acquisition offer and takeover speculation, and we may be named in additional lawsuits in the future. This litigation could become time consuming and expensive, could prevent or delay any transaction and could harm our business.

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1031798--11/15/2007--BEA_SYSTEMS_INC