1031798--4/14/2006--BEA_SYSTEMS

related topics

{tax, income, asset}

{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{stock, price, operating}

{system, service, information}

{property, intellectual, protect}

{control, financial, internal}

{regulation, change, law}

{personnel, key, retain}

{interest, director, officer}

{operation, international, foreign}

{operation, natural, condition}

{stock, price, share}

Significant unanticipated fluctuations in our actual or anticipated quarterly revenues and operating results have in the past, and may in the future, prevent us from meeting securities analysts or investors expectations and have in the past, and may in the future, result in a decline in our stock price. Our quarterly revenues and operating results are difficult to forecast because of the timing, size and composition of our customer orders. The seasonality of our sales typically have a significant adverse effect on our revenues in our first fiscal quarter. If we do not effectively compete with new and existing competitors, our revenues and operating margins will decline. If we cannot successfully integrate our past and future acquisitions, our revenues may decline and expenses may increase. Goodwill and Other Intangible Assets We face numerous additional risks in connection with the integration of Plumtree into our business, which may adversely affect our results of operations. We have a high debt balance and a significant portion of that high debt balance comes due in December 2006, which could result in substantial cash outflow, changes to our debt to equity ratio and constrict our liquidity. The price of our common stock may fluctuate significantly. The lengthy sales cycle for our products makes our revenues susceptible to substantial fluctuations. If our WebLogic Platform 8.1, WebLogic Server 9.0, WebLogic Communications Platform, BEA AquaLogic and other recently introduced products do not achieve significant market acceptance, or market acceptance is delayed, our revenues will be substantially adversely affected. Our international operations expose us to greater management, collections, currency, export licensing, intellectual property, tax, regulatory and other risks. 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. Changes in accounting regulations and related interpretations and policies, particularly those related to revenue recognition, could cause us to defer recognition of revenue or recognize lower revenue and profits. We could report a net loss again. If we are required to remit significant payroll taxes, it will have an adverse impact on our future financial results. Failure to maintain effective internal controls could have a material adverse effect on our business, operating results and stock price. Any failure to maintain on-going sales through distribution channels could result in lower revenues. If the markets for application servers, application platform, 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. Third parties could assert that our software products and services infringe their intellectual property rights, which could expose us to increased costs and litigation. 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 our products contain software defects, it could harm our revenues and expose us to litigation. 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. If we are unable to manage growth, our business will suffer. If we lose key personnel or cannot hire enough qualified personnel, it will adversely affect our ability to manage our business, develop, acquire new products and increase revenue. Recent shareholder proposals that were approved at our annual shareholder meeting may result in difficulty retaining directors and may encourage potential hostile acquirers of the Company which maybe significantly disruptive to our Board, management and operations. We have adopted a preferred stock rights plan which has anti-takeover effects. Unanticipated changes in our effective tax rates or exposure to additional income tax liabilities could affect our profitability We could incur substantial charges to our consolidated statement of operations if we were to commit to a plan to sell and take related actions with regard to the 40-acre parcel of land in San Jose, California that is recorded on our balance sheet. Accounting for the Impairment and Disposal of Long-Lived Assets The ongoing U.S. military activity in Iraq and any terrorist activities could adversely affect our revenues and operations.

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1031798--4/14/2006--BEA_SYSTEMS_INC