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Five analysts and top management from fourteen sector firms examine the Enterprise & Application Software sector in this 70-page Enterprise & Application Software Issue from The Wall Street Transcript, available at (212/952-7433) or www.twst.com

TWST: Brendan, is using the term “enterprise and application software” still the right categorization for what we are talking about?

Mr. Barnicle: Yes, I think it is. We recently changed our categorization from enterprise applications to just being enterprise software. We are looking at the group more broadly because I think that, increasingly, we’re going to see this group start to shrink. We’re already seeing this with Oracle (ORCL), PeopleSoft (PSFT) and J.D. Edwards (JDEC). The enterprise application side has gotten increasingly difficult and, as part of that, we’re going to see more consolidation. Frankly, I think that’s the healthiest thing for the industry and the only way to combat the deflation that is going on. So increasingly, we’ll see people focus more broadly than just on the application side of enterprise software. We expect people will be looking at all of enterprise software, including some of the large enterprise infrastructure software companies as well, so people like BEA Systems (BEAS), Veritas (VRTS) and Oracle.

TWST: Brendan, as we look at the second half of this year and out into next year, what are your expectations or what are you hearing?

Mr. Barnicle: We’re not expecting any rapid recovery in the second half or for next year for that matter. I think as Richard alluded to, it is really back to the future. However, we do have a lot more vendors out there that have got to be consolidated. So the excess of vendors needs to be dealt with first. Like the other speakers have said, we see that the federal government continues to pick up. That seems to be an area of strength. The only other area that we’ve noted that other speakers haven’t alluded to is some of the telcos. The telcos are spending for software infrastructure as a result of things that they’re doing around DSL and some wireline replacement and some of the other initiatives. We’re seeing a hardware buildout that ultimately will lead to some sort of software buildout. But the software industry in its current state is a maturing industry, so I think we’re going to continue to see things like consolidation and other hallmarks or more mature industries.

TWST: Brendan, what is it about BEA (Nasdaq:BEAS) that appeals to you at this point?

Mr. Barnicle: One of the trends I alluded to earlier was the growth in Web services. I’m still surprised when I talk to customers about how many people are still doing Web services even though they’re really in the early stages. You basically have two platforms to develop those Web services: .NET, which is controlled by Microsoft, and Java, which is now largely controlled by BEA and IBM. Despite prolonged concerns about IBM putting BEA out of business, IBM really hasn’t been all that successful at it. They’ve taken some share and made some move up, but in this environment in general we’ve seen that the big have gotten bigger. If IBM hasn’t been able to take a lot of share in this environment, we don’t know one in which they would. So we think that BEA has established itself as the leader in that space, and as Web services continue to grow it becomes a natural leader. Part of that is because of the way they bill their clients; it grows geometrically because it’s based on the usage that’s occurring on the application server platform, which is based on the number of CPUs you’re running. So as more customers access their Web-based application and as customers develop more applications, their business continues to grow.

This special issue includes:

1) Enterprise & Application Software - In an in-depth (8,400 words) Roundtable Forum, Brendan Barnicle, Principal and Senior Research Analyst at Pacific Crest Securities, Richard Davis Jr., a Managing Director at Needham & Company, Imran Khan, an Analyst at Fulcrum Global Partners LLC and Jason R. Kraft, an Analyst at A.G. Edwards & Sons, examine the outlook for the sector and share specific stock recommendations.

2) Enterprise & Consumer Software - In an in-depth (3,500 words) Analyst Interview, Justin Cable, an Analyst at B. Riley & Co., examines the outlook for the sector and shares specific stock recommendations.

3) CEO interviews (average 2,500 words). Top management of fourteen - sector firms examine the outlook for their firm and the sector. Firms include:

Attachmate Corporation, eGain Communications Corporation, Evolving Systems, F5 Networks, Fiberlink Communications Corporation, Forgent Networks, Progress Software Corporation, Pumatech, ROAMING MESSENGER, SealedMedia Inc., SmartPipes, Tarantella, Zaplet, Zi Corporation