Piper Jaffray, the US investment bank, has delivered its second cool assessment of BEA Systems' business prospects in a week, asserting BEA will continue with acquisitions to ignite growth.

Piper Jaffray believes acquisition is a "reasonable strategy" to pursue, but noted the strategy indicates growth in BEA's core markets "remains challenging."

The research note came as BEA's software business only recently returned to license revenue growth. BEA saw five successive quarters of declining revenue growth up until the second quarter of this year, when it recorded a modest 1.7 per cent increase.

Like many in enterprise software, BEA has been hit by a slowdown in customer spending. BEA has faced added pressure from an aggressive IBM selling WebLogic and from open source application servers including JBoss and Gluecode, who offer customers - notably developers - a lower-priced alternative for their development and runtime needs.

Piper Jaffray last week said it expects open source to exert even more pressure on BEA's business. It believes customers will delay new purchases of WebLogic until they have had time to evaluate the latest edition of Gluecode, owned by IBM, which is due later this year.

Again, like many in enterprise software, BEA is using M&A to enable growth. BEA spent buying $200m on fellow enterprise portal vendor Plumtree, to gain 700 clients in local government, retail and packaged goods running Java and .NET.

Piper Jaffray said that it believes BEA will likely continue to acquire more companies around its product base. That potentially means deals in application servers, integration, service oriented architectures (SOAs) and - yup - portals. ®