Oracle's BEA-line for middleware
That's a cool $18 million a day for each of the 98 days BEA held out, says Wendy Tanaka in Forbes. Not bad for three months' work.
Well played BEA, says Tim Beyers on The Motley Fool; "Talk about an all-in bluff." In October, Oracle president Charles Phillips said BEA had "become less relevant." Now, Phillips says that BEA is a "pioneer in middleware" and claims the deal recognises the company's success with customers.
But it's a win for Oracle, too, says Beyers. BEA popularised one of the first middleware (software that connects systems that aren't built to work together) platforms, TUXEDO, and its application server, WebLogic, helped dozens of e-commerce businesses spring to life, including the likes of Amazon.
"Now all of that expertise will be in Oracle's hands," says Beyers, and combined with Oracle's own infrastructure technology they're set to manage everything from customer marketing to inventory management to financial reporting.
And while Oracle might wind up paying more for BEA than it paid for Hyperion, Siebel Systems or PeopleSoft, on a maintenance-revenue basis the price is in line with Oracle's other acquisitions, says JMP Securities analyst Patrick Walravens, quoted in Forbes.
More than 50 per cent of BEA's revenues come from maintaining existing accounts and Oracle will inherit a steady revenue stream of $870 million annually from that. Not to mention BEA's customer base, estimated at 15,000 clients worldwide.
That's where this deal makes sense, says Beyers. "Oracle has doubled its free cash flow output in less than three years. Having BEA's customers probably means more cash for Oracle's ongoing tussles with SAP and Microsoft."
On that front, Technology Business Research analyst Stuart Williams speculates that Oracle could make a run at Tibco, a California-based middleware company, and even open-source software maker Red Hat.
If it bought Red Hat, Oracle "could take the wind out of Sun Microsystem's middleware effort," Williams tells Forbes's Tanaka, as well as weaken Microsoft's position in the enterprise space. Oracle "could take Red Hat code and clean it up and repackage it as Oracle Linux."
"Of course, there are scads of small software makers," says Tanaka, and Oracle, which has acquired 41 of them the last four years, will likely buy more. As Phillips said at the company's annual expo, "Anyone remotely thinking about selling their company is going to come to us. We've become the IPO market for the enterprise software industry."
BEA waited and reaped, Wendy Tanaka, Forbes
Oracle caves, Tim Beyers, The Motley Fool
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