Menu
Kim Kardashian Leaked Photos Backlash

Kim Kardashian Leaked Photos Backlash

Mazda Miata 2016 model revealed

Mazda Miata 2016 model revealed

The Sexiest Halloween Costumes of 2014

The Sexiest Halloween Costumes of 2014

Miley Cyrus New Butt Gets in Trouble with Law

Miley Cyrus New Butt Gets in Trouble with Law

Larry Ellison Steps Down as CEO of Oracle

Larry Ellison Steps Down as CEO of Oracle

With $1.5B Responsys Buy, Oracle Aims Right At Adobe, Salesforce In War For Cloud

Dec 23 2013, 2:31pm CST | by , in News

With $1.5B Responsys Buy, Oracle Aims Right At Adobe, Salesforce In War For Cloud
Photo Credit: Forbes
 
 

On Thursday, Oracle announced positive quarterly earnings results that beat Wall Street estimates. The next day, it declared war.

Oracle’s announcement Friday that it’s acquiring cross-channel marketer Responsys for a cool $1.5 billion is exactly that, a move that both responds to Salesforce.com’s centerpiece 2013 purchase while signalling to investors that the company’s going to push into new areas of cloud software like marketing in a big way next year and into 2015.

“This absolutely is a response to Salesforce,” says Forrester analyst Rob Brosnan “This is the battleground for the next ten years.”

Oracle had hinted that changes were afoot in its after-market earnings call Thursday–just not that they’d be closed so fast. “[CEO] Larry [Ellison] used the word ‘options’ quite a bit,” says Gartner analyst Bill Hostmann. “The way he was saying ‘options’ several times usually translates to, ‘ we’re going for better margins.’”

Those margins have been an elusive priority for billionaire Ellison’s Silicon Valley giant since at least 2010, when the company paid $7.4 billion for Sun Microsystems and what’s proven a troubled double-down on hardware. Oracle’s watched cloud companies continue to soar as it’s struggled to sell new subscriptions and has been hit hard by weakness in Asia also felt by other major tech vendors like Cisco and IBM. After years of stability, Oracle missed earnings early this year, then posted decidedly mixed results in September, clearing earnings expectations but seeing its stock slide on anemic revenue growth.

On Thursday, Oracle again beat analyst expectations and showed it had turned sales around in Europe and China. Concerns remained about Oracle’s ability to sell new subscriptions for its cloud software, however. No matter: the next day Oracle made announced its aggressive Responsys buy.

The market has responded: Oracle shares are currently up $2.33, or 6.73%, since Thursday morning.

Responsys is the company’s fourth billion-dollar buy in recent months, joining Taleo, Eloqua and RightNow, and it won’t be the last. Oracle’s co-presidents Safra Catz and Mark Hurd’s repeated comments on Thursday’s call about the company’s strong cash flow now feel like a hint. With a market capitalization well north of $160 billion, Oracle has more cash than the entire listed value of some of its competition. More deals can come.

Responsys likely becomes a centerpiece of a fuller cloud marketing suite, and that means war for two $30 billion players who’ve been reaping gains in the marketing space: Salesforce.com and Adobe. Salesforce.com set the market in June when it bought ExactTarget for $2.5 billion and reorganized its marketing divison around ExactTarget chief executive Scott Dorsey. And it’s Adobe that first recognized a need to shift to marketing. “Adobe’s still the preferred partner with the broader story to tell in marketing,” says Brosnan. they are still the one to beat.”

Salesforce CEO Marc Benioff knows the threat. Ellison and Benioff have had a publicly hot-cold relationship in recent years, one that perhaps bottomed out in 2011. Since then, Salesforce became a customer this summer for Oracle’s flagship new 12c databases. And Benioff seems to embrace his frenemy status with Ellison.

Tonight’s @oracleopenworld keynote proves that @oracle and @larryellison remain the absolute leader in database technology.

— Marc Benioff (@Benioff) September 23, 2013

Benioff is much more territorial when it comes to the cloud, closer to his own business. There’s this retweet after appearing on Bloomberg TV:

“Oracle is very much a vestige of the past…they talk about (cloud computing) but they haven’t delivered.” — @benioff on @BloombergWest

— Emily Chang (@emilychangtv) October 7, 2013

And then most recently, this bit of snark in response to Oracle’s earnings from last week:

Just saw this graph of Oracle’s license growth over the last 10 quarters. pic.twitter.com/jglsxm0DhE

— Marc Benioff (@Benioff) December 19, 2013

Benioff’s reply reveals that he notices what’s happening, though he hasn’t commented yet on the Responsys deal. Plus he has the lead. “Oracle is playing catch-up here in the cloud in a market with significant competition,” cautions Josh Olson, analyst at Edward Jones.

Momentum is a priority for Oracle, but the real goal for Ellison is to tap the higher revenue multiples and investor interest that comes from the transparent and consistent earnings of cloud software and which have allowed Adobe and Salesforce to trade at much higher off their sales than Oracle does. That’s the long game, and it’s a move that will take a lot more than one more $1.5 billion purchase or two.

Ellison himself told analysts on the company’s earnings call that the company’s product mix was still early in a transition process. “Oracle is a big ship to move,” says Olson, even for the now-reigning America’s Cup champion.

As for Responsys itself, analysts believe Oracle paid a premium for the remaining largest independent company of its kind, one with good cachet but technology that is a bit dated. That leaves StrongView and Silverpop left for other tech players looking to make a move. Analysts say they wouldn’t be surprised to see SAP make the next move to offer marketing alongside its HANA database platform. IBM and Microsoft, meanwhile, “aren’t that relevant” but could be in the market for medium-sized acquisition response./>/>

And while analysts expect Oracle to see growth in sales of its 12c databases, the company’s best bet to get ahead of its earnings cycles and show positive momentum may be to pour more resources into Ellison’s rivalry with Benioff and the upstart Salesforce. That sets the stage for an arms race that will have major implications for the soul of Silicon Valley and cloud computing worldwide.

Follow me on ForbesTwitter and Facebook for more tech coverage in startups, ad tech, enterprise software and venture capital.

Source: Forbes

You Might Also Like

Updates

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

 

Comments

blog comments powered by Disqus

Latest stories

Music Midtown 2014 Blasts Through Piedmont Park
Music Midtown 2014 Blasts Through Piedmont Park
Music Midtown's one of Atlanta's biggest concerts and festivals and this year the stars came in droves. Eminem headlined while Jack White, John Mayer, Iggy Azalea, and Lorde all made their mark.
 
 
Upcoming &#039;Bond&#039; Film To Begin Filming In December
Upcoming 'Bond' Film To Begin Filming In December
Main villain to be physically imposing character.
 
 
Rihanna Leaked Photos also Found In latest Hacker Scandal
Rihanna Leaked Photos also Found In latest Hacker Scandal
This weekend another big leak of private celebrity photos has hit the web. First time victims Kaley Cuoco and Jennifer Lawrence are hit again and now reports surface that Rihanna's private photos are also among the leak pics.
 
 
Kim Kardashian Leaked Photos Backlash
Kim Kardashian Leaked Photos Backlash
We have a new celebrity nude photo scandal this weekend. A hacker has published nude photos of Kim Kardashian and others on 4Chan. The internet seems though to have no sympathies for Kim Kardashian's violation of privacy.
 
 
 

About the Geek Mind

The “geek mind” is concerned with more than just the latest iPhone rumors, or which company will win the gaming console wars. I4U is concerned with more than just the latest photo shoot or other celebrity gossip.

The “geek mind” is concerned with life, in all its different forms and facets. The geek mind wants to know about societal and financial issues, both abroad and at home. If a Fortune 500 decides to raise their minimum wage, or any high priority news, the geek mind wants to know. The geek mind wants to know the top teams in the National Football League, or who’s likely to win the NBA Finals this coming year. The geek mind wants to know who the hottest new models are, or whether the newest blockbuster movie is worth seeing. The geek mind wants to know. The geek mind wants—needs—knowledge.

Read more about The Geek Mind.