Oracle buys web firm Eloqua to boost cloud presence

By Sayantani Ghosh
Thu Dec 20, 2012 12:10pm EST
n">(Reuters) - Oracle Corp agreed to buy Eloqua Inc, a maker of web-based marketing automation software that listed in August, for about $810 million as it seeks to expand its cloud-computing services.
Eloqua makes software to help businesses predict and grow revenue by monitoring marketing and sales initiatives. Its customers include AON Plc, Dow Jones, Automatic Data Processing Inc, Polycom Inc and National Instruments Corp.
Oracle, which came late to cloud computing, is trying to be a one-stop shop for operating systems, databases, computer programs and infrastructure over the Web.
"The acquisition of Eloqua will add a leading market automation solution to Oracle's strong salesforce automation products and the recently acquired RightNow call center automation solution," Nomura Equity Research analysts said in a research note.
Oracle bought RightNow Technologies last year for $1.5 billion, sparking several more acquisitions in the cloud-computing market including IBM Inc's acquisition of Kenexa and SAP AG's purchase of SuccessFactors.
Oracle, which has traditionally offered installed software products, then bought Taleo, a cloud-based HR software firm.
"We would expect Oracle to continue to make acquisitions in this space, to bolster its Fusion Applications suite and respond to competitive pressure in the applications market from SAP and Salesforce.co," Nomura said.
Oracle priced the deal at $871 million, net of Eloqua's cash. Based on the 34.5 million Eloqua shares outstanding as of October 31, the equity portion of the deal came to $810 million.
Cloud computing, a broad term referring to the delivery of services via the Internet from remote data centers, is a favorite with corporate technology buyers because it is faster to implement and has lower upfront costs than traditional software.
Oracle Chief Executive Larry Ellison mocked cloud computing in 2008 as "complete gibberish". He described it as a fad, comparing the computer industry to the fashion world.
But Oracle has since introduced its own web products and acquired several firms selling internet-based software as its corporate customers embraced web services offered by Salesforce.com Inc, Amazon.com Inc and Google Inc.
"Although Oracle already had strong marketing functionality, this gives it a cloud offering to deliver and an additional base of midmarket customers providing a recurring license maintenance stream," Nucleus Research analyst Rebecca Wettemann said.
The company's $23.50 per share offer for Eloqua represents a 31 percent premium to Eloqua's Nasdaq close on Wednesday.
Eloqua shares jumped to match the offer price while Oracle's shares were flat at $34.05 on the Nasdaq.
"Eloqua's leading marketing automation cloud will become the centerpiece of the Oracle Marketing Cloud," said Thomas Kurian, Executive Vice President of Oracle Development.
Eloqua's board has unanimously approved the deal, which is expected to close in the first half of 2013.
Oracle said on Tuesday that software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.
(Editing by Don Sebastian and Rodney Joyce)

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By: Dilusha On 7:14 AM

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Strong software sales push Oracle shares to 19-month high

n">(Reuters) - Shares of Oracle Corp, the world's No. 3 software maker, rose 4 percent to their highest in 19 months on Wednesday after it forecast strong sales for next year, prompting several brokerages to raise their price targets on the stock.

The company's results often set the tone for smaller software makers, and analysts said the 17 percent jump in its quarterly software sales boded well for the industry.

Investors pay close attention to new software sales as they generate high-margin, long-term maintenance contracts and are an important gauge of a company's future profits.

"Oracle delivered strong results in a challenging environment," Susquehanna Financial Group analyst Derrick Wood said in a note to clients.

Investors are worried that corporations would postpone spending on technology because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise on the looming "fiscal cliff", an automatic rise in tax rates and government spending cuts next year.

Shares of Oracle, which competes with Germany's SAP AG and Salesforce.com Inc, rose to $34.15 in early Wednesday trading on the Nasdaq.

Oracle said earlier this month it would give over $800 million back to shareholders, joining a rising number of companies accelerating dividend payments or declaring special dividends because of uncertainty surrounding the U.S. government's fiscal plans.

"(Oracle's) investments and efforts to build out its product portfolio and sales capacity are clearly starting to pay off handsomely and enable it to navigate the rough seas," Stifel Nicolaus analyst Brad Reback said.

Reback, who has a "buy" rating on the stock, raised his price target by $1 to $38.

Oracle, which was slow to embrace cloud computing -- a broad term referring to the delivery of computer services via the Internet from remote data centers -- is now trying to drive growth by promoting its suite of cloud computing products.

Corporate technology buyers like the approach because it is faster to implement and has lower upfront costs than traditional software, which businesses need to install on their own computer systems.

"Calendar 2013 is promising for Oracle thanks to a strong product cycle, market share gains, and healthy secular trends for cloud spend," FBR Capital Markets analysts said.

The brokerage, which has an "outperform" rating on the company's stock, raised its price target by $1 to $37.

"The only blemish in the quarter was on the hardware front, as the company remains focused on sunsetting uneconomical product offerings," FBR said.

The company's hardware business, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010, continued to be sluggish, and quarterly hardware systems product sales fell 23 percent from a year earlier.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Roshni Menon)

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By: Dilusha On 12:06 AM

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Oracle beats outlook, shrugs off fiscal debate

Oracle signage is seen outside Mocsone Center during Oracle OpenWorld 2012 in San Francisco, California October 1, 2012.

Credit: Reuters/Stephen Lam

By Jim Finkle and Noel Randewich

BOSTON/SAN FRANCISCO | Tue Dec 18, 2012 8:39pm EST

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.

Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.

Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.

"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."

Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.

The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.

Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.

It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.

"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."

Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.

Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.

Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.

OFF A CLIFF

Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.

Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.

"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."

On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.

"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.

The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.

Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.

Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.

Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

(Reporting by Jim Finkle; Additional reporting by Noel Randewich; Editing by Gary Hill, Richard Chang and Jeremy Laurence)

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By: Dilusha On 9:57 PM

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