BEA Shares Fall Again On Reports Of Changing Sun-IPlanet Strategy

Shares of BEA Systems Inc. fell for a second day Thursday on fears that competition against the market-leading application server vendor would intensify after reports that Sun Microsystems would bundle its application server with the Solaris operating system.

Shares of the San Jose, Calif., company finished the day on the Nasdaq at $26.19, down 81 cents, or just over 3%. On Wednesday, the stock plummeted 20% after SG Cowen analyst Rehan Syed said a trade magazine report suggested Sun was considering tighter integration between the iPlanet application server and the Unix-based Solaris.

On Thursday, officials from Sun and iPlanet, an alliance between Sun and the Netscape division of AOL Time Warner Inc., said the strategy between Sun and iPlanet hadn't changed since last year, when the companies started marketing the products together. Also, in disclosing a new Web strategy in February, Sun said it would offer the Solaris OS and the iPlanet application server bundled in the company's hardware. But "to answer directly in terms of are we integrating and cementing the application server into Solaris, the answer is absolutely not," says Marge Breya, marketing officer for iPlanet.

IPlanet would continue to run on multiple operating systems, and Solaris would support a variety of application servers, including BEA's WebLogic, says Anil Gadre, VP of Sun's Solaris unit.

Syed told Reuters that even if Sun changed its position on iPlanet, it probably wouldn't affect BEA in the long term, because the latter's product is better. "[Sun's] technology isn't good enough, and we think enterprise software buyers aren't very price sensitive and want the highest-quality product in the market," Syed said.

Lehman Brothers analyst Neil Herman described reports of the iPlanet/Solaris integration as "unclear" and said "BEA has a distinct advantage over both these competitors because of its platform-neutral approach and strong support from independent software vendors." Herman wrote in a research note, "We continue to believe that BEA will emerge as the dominant player in this space."

Application servers have emerged as the infrastructure for running commercial Web sites and the development platform for building the personalization, content management, shopping carts, and other applications.

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