Friday, October 12

10 Reasons BEA Should Accept Oracle Takeover

By The VAR Guy 7 comments

Okay, folks. The VAR Guy finally had some time to think about Oracle’s proposed $6.7 billion takeover of BEA Systems. Here are 10 reasons why BEA Systems should say yes to the deal.

10. Takeover Triple Play: Oracle acquired PeopleSoft, Siebel and now Hyperion. Oracle kept those companies’ custoemrs happy — for the most part — which was a miracle. The VAR Guy suspects Oracle would keep BEA customers happy, too.

9. The $1 Billion Challenge: BEA’s annual revenue, at around $1.3 billion according to Yahoo Finance, is in an awkward neighborhood. BEA is no longer a small company — yet doesn’t have the clout of a massive software provider. Numerous companies have collapsed when they hit the $1 billion mark. Prime example: Novell. When you’re at $1 billion and you’re not growing super fast in the software market, it’s time to sell.

8. Nearly $7 Billion: Oracle’s offer for BEA is generous. BEA disagrees and hopes other companies place bids to drive up the takeover price. Read the rest of this list to see why nobody may come to BEA’s rescue.

7. Don’t Wait for IBM: Sure, IBM could launch a white knight bid for BEA. And The VAR Guy has a ton of respect for IBM software guru Steve Mills. But Big Blue has never really been a “Silicon Valley” type software company. Both Oracle and BEA fit the the Silicon Valley mold.

6. SAP: Too distracted with the Business Objects buyout to make a play for BEA.

5. Microsoft: Generally doesn’t acquire software companies that have extensive code on Unix and Linux. Yes, Microsoft connects to Linux these days. But remember: The vast majority of Microsoft’s applications remain only available for Windows.

4. Hewlett-Packard: Actually, HP would make a great buyer for BEA. But that would force HP to upset Oracle — its closest database partner other than Microsoft.

3. Location, Location, Location: BEA and Oracle are located 24 miles from each other. Close enough for Oracle CEO Larry Ellison to bark instructions to his lieutenants at BEA headquarters, but far enough away for BEA to get some work done.

2. Partners Win: One of Oracle’s top channel executives, Rauline Ochs, built BEA’s channel programs a few years back. This should give BEA and Oracle customers/partners piece of mind if/when the two companies come together.

1. Man on a Mission: Oracle President Charles Phillips is driving the takeover bid. Smart move. Things tend to get emotional when CEO Larry Ellison gets out in front of the press. Let Phillips move the pieces into place, Larry, and this could be another winning move for Oracle

Comments (7)

  1. Number 9 caught my eye. Seems like the vast majority of software companies hit a wall when they reach $1B in sales.

    James Gunn, October 12th, 2007 at 3:10 pm #
  2. How about Cisco. Don’t they want to get into the software market? They would get a huge headstart in the middleware space with a quality acquisition such as BEA.

    Andrew, October 14th, 2007 at 9:32 pm #
  3. Andrew: Hmmm. The VAR Guy thinks CSCO wants to get into software that strengthens unified communications without necessarily competing head-on with ORCL, SAP, IBM. However, BEA would be an interesting play for CSCO.

    The VAR Guy, October 15th, 2007 at 8:13 am #
  4. Hey Joe

    I spent a good part of 5 years doing technology strategy for BEA and a deal with Oracle had been bounced around internally since I can remember. The funny thing is everyone was bullish about it then and when it hit I suppose they panicked and swallowed a poison pill. I personally don’t see the value because of the apps duplication but maybe it’s a customer acquisition play. This is good for moi as I bought it at $9 :-)

    JK

    Johnny Kessel, November 7th, 2007 at 12:42 am #
  5. oops VAR Guy no Joe sorry :-)

    Johnny Kessel, November 7th, 2007 at 12:44 am #
  6. Hmmm. Who’s this “Joe” guy you keep referring to? Thanks for the thoughts, Johnny. BEA better beat its quarterly earnings estimates or a lot of shareholders are going to wonder why the company didn’t accept Oracle’s offer. And no, The VAR Guy is not a BEA shareholder.

    The VAR Guy, November 7th, 2007 at 6:51 am #
  7. Your MSP man Joe Panettieri

    Yep these guys couldn’t get over a Billion in sales no matter what but I would imagine Oracle would prefer SAP doesn’t get a hold of them.

    JK

    KitRx Blog

    Johnny Kessel, November 9th, 2007 at 8:05 pm #

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