PLUGGED IN: Oracle Sees the Future -- Now by Mark Veverka
Highlighted companies: Oracle Corp. (ORCL), Stellent Inc. (STEL) Microsoft Corp. (MSFT)
Summary: One day after Microsoft Corp.'s (MSFT) joint Linux venture with Novell, Oracle Corp. (ORCL) announced it was acquiring yet another software company -- Stellent Inc. (STEL) for $440M. Their product: content-management software, which helps create, capture, store, publish, and manage documents such as web content and images. The acquisition helps Oracle keep pace with International Business Machines Corp. (IBM), which has been steadily building its own software arsenal, and recently acquired content-management provider FileNet. Oracle shares have climbed 45% this year -- largely due to its successful acquisition and integration of Siebel Systems, PeopleSoft and J.D. Edwards -- which leaves analysts positive about its most-recent venture, despite the hefty price tag (60x forward earnings). Cowen & Co.'s software analyst Peter Goldmacher: "When overpaying in software, you will get your money back." He remains an ORCL bull as long as the it keeps on snapping up strategically positioned companies. In STEL, Oracle gets a vendor with 4,700 installed customers to which it can market its applications and maintenance, while reducing redundant costs. Goldmacher sees Stellent enhancing Oracle's bottom line within 12 months.
Quick comment: Recent Seeking Alpha Oracle analysis: William Trent discusses Oracle's acquisition strategy • Oracle discusses its own acquisition strategy • Oracle's most recent earnings conference call transcript