Oracle improbable to persist with BEA

Larry Ellison, Chief Executive of Redwood Shores based Oracle Corp., told analysts on Wednesday that the business software maker is unlikely to renew its recent $6.7 billion bid for rival BEA Systems Inc. and would rather prefer to pursue other takeover targets.

Late last month, Oracle withdrew a $17-per-share offer for BEA when the board of BEA demanded $21 per share, i.e. about $8.2 billion. Ellison's remarks yesterday paralleled statements that Oracle issued then. In a late afternoon meeting with analysts, Ellison said, "If we make another offer, the price would be lower than Oracle's original bid.”

During the past three years, Oracle has already spent more than $25 billion for buying a number of smaller competitors like PeopleSoft, Siebel Systems and Hyperion Solutions.

Ellison indicated that although Oracle has already bagged its top takeover targets, the company is still looking for further buyouts. He said, "We are now looking at our second favorite stocks and we have found some attractive candidates.”

He added that Oracle could become even more aggressive if a weakening economy causes the prices of tech stocks to fall and create more bargains.

Many stocks in the technology sector, including Oracle’s have already suffered due to concerns about a slowdown on technology spending. Oracle's shares fell 34 cents to $20.18 on Wednesday which is 9 percent fall in the stock’s value during the past week.

Investors are still hopeful that BEA will be able to elicit a better offer from Oracle or another bidder. Shares of BEA rose 51 cents to $17.40 but later fell 39 cents in after hours trading on Wednesday.

In spite of the predicament, several analysts still believe that Oracle would ultimately take over the San Jose based BEA once the two sides can agree on a suitable price.

BEA is one of the leading makers of computer coding called "middleware" that helps business applications interact more smoothly with databases.

The company has struggled with sliding sales and accounting headaches due to its past mishandling of employee stock options, making it more vulnerable to a takeover.

BEA has failed to file its quarterly earnings for more than a year due to the disordered finances, a factor that has prevented investors from getting a firm grasp on the company's performance.

The company expects to file financial statements dating back to July 2006 on Thursday and a clearer picture could start to emerge then. BEA is also scheduled to release its results for its fiscal third quarter ending in October.

According to Securities and Exchange Commission documents filed Wednesday, BEA recently threw a financial security blanket over its roughly 3,800 employees who have been undermined due to all the takeover talk.

Last week BEA guaranteed severance packages that will provide three months to 12 months of pay to full time and most part time employees who are fired within a year after a takeover.

The severance protection could perhaps make BEA a less attractive takeover target by adding to an acquirer's expenses after a sale is completed.