Eye on Oracle

Feb 13 2008   10:24AM GMT

Salesforce.com acquisition speculation persists

Shayna Garlick Shayna Garlick Profile: Shayna Garlick

With neither company willing to confirm nor deny, we can only speculate as to whether the rumored buyout of Salesforce.com by Oracle holds any truth to it. And there has been no shortage of such speculation ever since Tom Foremski, a former Financial Times reporter, posted in his Silicon Valley Watcher blog:  

“I’m hearing from a reliable source that Salesforce.com has approached Oracle to gauge if there is any interest in a sale at $75 a share.”

That single statement has sparked reaction in both the blogosphere and the stock market, with yesterday’s Salesforce.com stock shooting up almost 10%, closing out the day at $54.45 a share.

Many agree with Foremski that such a deal would make sense for Oracle. For some, this idea isn’t new — back in November, Mary Hayes Weier posted “Five Reasons Why I Think Oracle Will Buy Salesforce.com” on InformationWeek.com’s CIO blog. She points out that what Salesforce.com lacks in profit margin it makes up for in mindshare and customers. Foremski writes that by acquiring Salesforce.com, Oracle could build on its online apps and software as a service offerings, improving itself as an SAP competitor (though one could easily argue that SAP could make a bid for Salesforce.com as well).

But is this enough to convince Oracle head Larry Ellison (who already holds a majority share in Salesforce.com competitor NetSuite) to make the deal?

Cowen and Co. analyst Peter Goldmacher surely doesn’t think so. In a note to investors, he writes:

“While we would not be surprised if Salesforce made such an overture, we would be very surprised if Oracle didn’t laugh them out of the building.”

Maybe Oracle will surprise us with an announcement in the coming weeks. But it seems almost just as likely that this rumor is just that — a rumor — and will quietly fade into the background. If Oracle doesn’t buy Salesforce.com in the near future, it may be very likely that someone else will (think SAP, Google, or Microsoft). After all, Oracle is done acquiring all the large companies…right?

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  • Matt Cuttings
    Just think of what such an aquisition will mean to the majority of Salesforce.com customers who are small businesses. The Oracle culture will not be as friendly towards them, after all Oracle is making money milking large enterprises for large amounts of money and it is in their DNA. If you use wordtracker you can tell that the phrase "Salesforce.com Alternative" is increasingly being searched for especially after such news. These customers will endup leaving salesforce.com and going with other smaller rivals such as Salesboom.com, Entellium, RighNow, etc.
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