Oracle takes cloud shortcut, overpays for Netsuite

Oracle paid US$9.3 billion in cash to buy Netsuite a cloud ERP company. The move will help bring the database giant up-to-speed in the market for cloud business apps.It needed a boost. Oracle has*dismissed*cloud computing in the past and has been slow at getting onboard.
While Amazon and*Microsoft*were busy building cloud portfolios, Oracle*still pushed*on-premise computing.
As reported in*The New York Times, the deal beefs up the database giant’s cloud offering.

Oracle will pay $109 per NetSuite share in cash, according to a*news release*issued by Oracle on Thursday. That represents a 19 percent premium above NetSuite’s closing price on Wednesday.

The deal surprises no-one. Netsuite has always been close to Oracle. Perhaps too close. An ex-Oracle executive founded Netsuite,*its current CEO also worked for Oracle. Oracle boss Larry Ellison provided capital in Netsuite’s early days. He*remained a significant shareholder with about 40 percent of the company’s stock.Some will raise eyebrows*at the price Oracle paid.*Many in the tech sector think Netsuite stock was overvalued.
It won’t help conspiracy theorists that Ellison*pockets*US$3.5 billion from the deal.
Yet as Ben Kepes writes in Computerworld:

Oracle was quick to inform the world that the deal was decided upon by a subcommittee consisting of only independent directors of the company.

The news may not be good for customers.*Oracle has a history of putting the price squeeze on customers after an acquisition. Not only that, but it has a rigid, old-school*approach to licenses, renewals and support. Netsuite has always belonged to the more approachable SaaS world.Nor is it good news for Netsuite employees. Oracle has a*reputation for*brutal efficiency*when*culling staff after an take-over.
Still, Oracle does acquisitions better than most technology companies of its scale. You can expect the new owner to sniff out the value propositions, repackage them*and get them to market fast. The deal will also speed Oracle’s own cloud transformation.
Filed under: Business Apps, Cloud Tagged: business, Enterprise resource planning, software http://pixel.wp.com/b.gif?host=billb...nz&ref=&feed=1

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