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Oracle Corporation (ORCL)

Business Update Call

January 16, 2008 9:00 am ET

Executives

Roy Lobo – Investor Relations

Larry Ellison - CEO

Alfred Chuang – Founder, Chairman, CEO of BEA Systems

Operator

Good morning, everyone and welcome to today’s Oracle Corporation Conference Call. Today’s conference is being recorded. At this time I would like to introduce Mr. Roy Lobo. Please go ahead, Sir.

Roy Lobo

Thank you, Operator. Good morning, everyone, and thank you for joining us on this call this morning to discuss Oracle’s acquisition of BEA. This is Roy Lobo, Head of Investor Relations.

With me in the call are Oracle’s CEO, Larry Ellison, and BEA’s founder, Chairman and CEO, Alfred Chuang. Each will be making a few prepared remarks and we will not be taking any questions.

I will start by reading the Safe Harbor statement:

Today’s discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that can cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision of these forward-looking statements in light of new information or future events.

Throughout today’s discussion we will attempt to present some important factors relating to our business that may affect our predictions. In addition, in connection with the proposed transactions, BEA will file a proxy statement, and BEA and Oracle intend to file other relevant materials with the SEC. You should review these materials in our most recent form 10-K and form 10-Q for a complete discussion of these factors and other risks under the heading Risk Factors. Copies of these documents may be obtained form the SEC web site.

With that I would like to turn the call over to Larry for his opening comments.

Larry Ellison

Thank you. Today we’re announcing an agreement to buy BEA Systems for $19.375 per share in cash. The offer is valued at approximately $8.5 billion or $7.2 billion net of BEA’s cash on hand of 1.3 billion. We anticipate this transaction will be between $0.01 and $0.02 accreted over the first full year after closing. Further information on the financial to Oracle will be provided as we approach the completion dates of this transaction.

We intend to finance the purchase with a combination of cash on hand and readily available short-term credit. As you know, last year Oracle generated more that $5.5 billion in free cash flow and ended last quarter with $8.4 billion in cash and marketable securities. While the timing of the transaction is subject to certain regulatory approvals, we expect the deal to close by mid-October in the year 2008.

Let me say that BEA has been a pioneer in middleware and this combination of Oracle and BEA recognizes the innovation, leadership, and customer success that BEA has achieved. Alfred Chuang was co-founder of BEA and he deserves a lot of credit for those successes. As you’ll hear from Alfred, both companies are extremely excited about this deal. Oracle and BEA share a vision of highly saleable, adaptable, standard-based products and technology based around the programming language Java. While this is a great deal for both companies, customers, partners and stockholders, it’s also a great day for the Java community and the vision of open-standards-based computing not dominated by any one company’s technologies.

For Oracle this deal is a very big step toward completing our vision of becoming a strategic enterprise software of choice for our customers with industry leading products and world-class technology solutions at every level of the stacks and across industry verticals. With this deal, we believe our open-standards-based technology stack will offer greater value to our customers than any alternative in the marketplace including those offered by Microsoft, IBM, SAP, Sun and the open-source vendors.

It reflects the exceptional strategic stake between our two companies in terms of our complimentary product strategies, geographic strengths and industry strengths. Although we both have numerous middleware products, one of the things that attracted us to BEA is that it’s product lines and vertical solutions are overwhelmingly complimentary to our Fusion middleware products. To cite just two examples, when this deal closes, we’ll immediately become the leader in messaging and transaction processing platforms, and in middleware solutions for the telecommunications vertical.

We’ve demonstrated over many acquisitions that we’ve made in the past three years how expanding our base benefits both our customers and our shareholders. This acquisition also provides sales to our middleware business. Over the past three years, Oracle’s middleware business has been doing well. But scale in the middleware business, as with all the software businesses, is critical in order to increase innovations and drive the market faster. We believe this acquisition creates the leading platform for customers to deploy, manage and analyze enterprise applications with substantial and compelling advantage over Microsoft’s Dotnet and the other Java alternatives in the marketplace.

Perhaps more importantly, we believe this transaction will accelerate the adoption of Java-based middleware as an alternative to Microsoft’s closed Dotnet architecture. It will accelerate the adoption of SOA to our customers and it will accelerate innovation in middleware technology. We will also be able to extend our strategic relationships with customers and partners to increase our penetration in key verticals like telecommunications in key regions like China.

Finally, the combination would add the strength of BEA’s employee to Oracle’s 75,000 employees. Middleware requires a highly specialized technically sophisticated sales force and in a very competitive market it’s difficult to acquire that kind of talent especially on the worldwide scale in which we operate and compete. Adding the significant number of BEA sales reps to our own middleware sales force will enable us to create a third major standalone sales force within Oracle Corporation in addition to our technical and application representatives.

Simply stated this combination of BEA get’s us where we need to be, a leadership position at every level of the software stack and across more industry verticals in more geographic locations around the world. For our customers, Oracle and BEA is clearly a winning combination. The combined offerings of Oracle and BEA will create a comprehensive and complimentary product footprint in middleware. Most of BEA’s customers are already Oracle customers and run mission-critical software from both companies. Many of BEA’s customers are already Oracle database or application customers. And an increasing number are also using complimentary middleware products from both firms.

Oracle provides the leading database solution, the leading seller solution, identity management, business intelligence, performance management and enterprise content management while BEA provides leading Java-based application server products, highly scalable messaging and transaction processing platforms, and vertical-specific technologies like a communication delivering service delivering platform. The products of both companies are built around open-standards to ensure continued customer choice and flexibility.

The result is, the customers will be able to build applications that maximize their datacenter investments, preserve investments in existing enterprise applications, manage existing web-based applications better, and develop new web-based applications faster all from a single strategic supplier; while at the same time increasing choice, flexibility and competition through our commitment to hot-pluggable technologies which serve as a basis for rapid third-party developments.

Finally, Oracle plans to aggressively support BEA’s products in a manner similar to other recent Oracle acquisitions. Our applications have clearly surpassed expectations as we continue to deliver new features and versions of PeopleSoft, Siebel and JD Edwards at a pace faster than when those companies operated standalone. Oracle Fusion middleware will continue to be the center of our current and future middleware application strategy. The Weblogic and other BEA technologies will be an increasingly important part of our offerings going forward.

Customers can continue to use their existing BEA products and they will be supported with more R&D and with a qualitatively higher level of support around the world. Our customers can choose to move to Fusion middleware as it continues to evolve and incorporate the best features of both companies’ products. Either way, it’s the customer’s choice. Oracle’s goal for customers with a recurring transaction is three-fold: preserving their investments in BEA’s products, accelerate innovation across their middleware products and provide these customers with a better portfolio of mission-critical technology.

With that, let me turn the call over to Alfred.

Alfred Chuang

Thanks so much, Larry, and thanks everyone for joining us on the line this morning with such short notice.

As you know, for several months our board of directors, with the help of our financial advisors has been exploring ways to maximize shareholder value, including engaging in discussion with third parties regarding a possible sale of the company. The agreement with Oracle is a culmination of that diligent process, and we’re pleased with that result. The board and I unanimously agree that this all cash transaction is the best way to maximize value for all of our shareholders.

This transaction delivers a substantial premium over our closing stock price yesterday and a significant premium over our stock price before Oracle’s original offer in October. We expect there to be reorganization, and our customer will benefit from our joining forces with Oracle to create an innovative global leader in enterprise software.

As Larry talked about, our two businesses area natural strategic fit, we bring together Oracle’s strengths in database and applications with BEA’s leadership in middleware. I’m proud of what I’ve accomplished over the last 13 years at BEA and I fully expect their innovative technologies, research and development talents, our leadership in the high-pro region of Asia Pacific and other regions will all contribute significantly to the combined company.

As we work toward the close of this transaction we’ll be coordinating with Larry and his team to develop a comprehensive integration plan to ensure a seamless transition for the organization, but most importantly for our customers. We recognize that a quick and smooth integration is absolutely essential to the success of the transaction. In the meantime, we’re operating independently and it will be business as usual for BEA. Our customers will continue to receive the highest quality service they expect from us and they should know, as Larry mentioned, that Oracle intends to preserve their investments in BEA’s products and will support our products in a similar manner to the other recent acquisitions by Oracle.

I look forward to speaking with you again in February for our first quarter’s earnings results and also our full year results.

Larry, back to you.

Larry Ellison

Great, thank you, Alfred for that and thank you everyone for joining us and for participating in today’s call. A telephone replay will be available for 24 hours. The replay number is 719-457-0820, and the pass code is 3644405. You can also access the web cast replay on the Oracle Investor Relations web site. The web cast replay will be available through January 22.

Thank you and with that I’d like to turn the call back to the operator to close.

Operator

That does conclude today’s conference. We thank you very much for your participation.

Question-and-Answer Session

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