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BEA Systems has broken its five-quarter streak of declining revenue from software sales and returned to growth - just.

BEA's chief executive Alfred Chuang on Wednesday announced a 1.7 per cent year-on-year increase in software licensing revenue to $118.3m for the second quarter.

It was BEA's first increase since the close of 2003, although the numbers couldn't have been much worse than the second-quarter 2004 results.

Revenue from license sales fell 8.6 per cent during that period compared to 2003. Revenue then fell 11.5 per cent during the third quarter compared to 2003.

And, in a further twist, revenue from services - BEA's star performer last year - declined during the most recent second quarter. Services revenue fell 0.8 per cent to $234m. During the second quarter of 2004, though - when software was falling - services went in the opposite direction, climbing 24 per cent.

Nevertheless, BEA chief executive Alfred Chuang went all out to convince Wall Street that BEA is back on a growth track. He told analysts BEA's core WebLogic business is growing faster than expected "indicating we are gaining market share". He forecast EA's total revenues for present the third-quarter would come in between $285 and $295m.

BEA is currently bringing a number of new products and initiatives to market, launched during the management churn and restructuring of 2004. These include the WebLogic SIP Server for voice and data services, AquaLogic for Service Oriented Architectures (SOAs), and programs to sign-up more VARs.

It seems few of these made an impact on BEA's revenue during this quarter.

Highlighting VARs, Chuang said the channel is a "critical vehicle" for helping to proliferate BEA's technology, and added that he expects "modest growth during the next couple of quarters". BEA's goal is to sign-up 100 VARs by the end of the year. SIP Server, meanwhile, is still in large-scale pilot tests with customers.

Growth during the second quarter came mainly from BEA's core WebLogic business, with 60 per cent of sales led by BEA's portal, and Solutions Frameworks for customer and employee services, trade processing, service delivery and RFID.

Overall, BEA reported an 18 per cent increase in its net income to $36.1m on revenue that grew 8.7 per cent to $285m for the three months to July 31. Earnings per diluted share (EPS) increased two cents to $0.09. For the six-month period, BEA reported a 25 per cent growth in income to $70.2m on sales that increased 7.9 per cent to $566.8m. EPS grew five cents to $0.18. ®

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