Oracle FINALLY Goes All In
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The article in February - the day Oracle announced the purchase of the online HR firm Taleo for $1.9 billion – didn’t necessarily emphasize the services Taleo brought to Oracle’s (NASDAQ: ORCL) suite of Cloud-related tools. The focus was more on the acquisition being a confirmation the company was getting serious about the Cloud marketplace as a viable revenue source. Today’s announcement of the $132 billion industry leader’s first end-to-end Cloud solution is the culmination of what has been a six-year process.
Who can forget CEO Larry Ellison’s now infamous quote from years gone by that Cloud computing was “complete gibberish”? Now with the rollout of the Oracle Public Cloud, maybe Ellison haters will finally put that bed - you know Larry's trying to. The new service appears to be an all inclusive, secure solution that will support the company's goal of generating $1 billion in Cloud revenue this year - and margins of 50+% by next year. Taleo alone is expected to kick in almost $400 million in 2012, and that’s on top of RightNow Technologies – another Oracle acquisition – estimated to contribue $268 million in sales this year.
Of course the Taleo and RightNow Technology acquisitions were only a drop in the bucket for Oracle. In the last two weeks alone the company has announced the purchase of the social marketing firm Vitrue for a reported $300 million, and just today posted a press release announcing the purchase of Cloud-based social intelligence solutions provider Collective Intellect.
The Cloud Marketplace
If ever Oracle was ready to meet industry leaders Salesforce.com (NYSE: CRM), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG) – not to mention Amazon’s (NASDAQ: AMZN) quietly growing AWS Cloud offerings – head on, it’s right now with Public Cloud.
According to Oracle the new Cloud service will include what amounts to an end-to-end solution for businesses. Everything from customer contact – that sound you just heard was Salesforce.com management giggling – to marketing, business intelligence and accounting, along with transaction monitoring and reporting. All those goodies combined with Oracle’s existing database software apps and the Java platform will make for one of the more complete, customizable Cloud computing solutions on the market.
Oh, and let’s not forget Oracle’s 400,000 existing business customers as an initial starting point. The sales force must be salivating at the prospect of presenting a potentially industry-leading Cloud solution to a bevy of existing clients – cha-ching! Management has promised to take a methodical approach to Cloud sales so they don’t end up simply shifting revenue from one division to the other – a legitimate concern with so many overlapping solutions.
No denying there will be competition – and it will continue to become more aggressive as the market expands. The players mentioned above are already heavy into Cloud computing and all have market-tested solutions and existing clients. Not to mention Oracle has the task of assimilating multiple companies and cultures ahead of them in the next 6 to 12 months – and possibly additional acquisitions on the horizon.
Lest We Forget
With the release of Oracle Public Cloud and the announcement of yet another strategic acquisition it might be easy to forget Oracle’s strong run of financial results the last few quarters – and that would be a shame.
Three quarters of consistent revenue growth, a balance sheet with close to $30 billion in the coffers (increased dividend anyone?) along with profit and operating margins significantly higher year-over-year made Oracle a sound investment option before today's news. Add what could be a Cloud game-changer to the mix, and a good alternative just got better.
timbrugger has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com, Google, Microsoft, and Oracle and has the following options: short JAN 2013 $150.00 calls on Salesforce.com and long JAN 2013 $150.00 puts on Salesforce.com. Motley Fool newsletter services recommend Amazon.com, Google, Microsoft, and Salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.