Sybase on the blocks? An article appearing in the Saturday Dec 29 2007 edition of the Wall Street Journal suggested that Sybase may be up for sale, its second-largest institutional investor, Sandell Asset Management, suggesting there would be “significant strategic interest” in acquiring Sybase, and that a “reasonable valuation” in a sale would be $30 to $39 a share. Sybase is currently trading around $24. The article refers to a possible proxy fight, meaning a fight over who controls the board.                                                                                                                               Flash back to the early 90’s, when many commentators –and more telling, many in big business- felt that Oracle had fallen behind technically to Sybase. Indeed in 1990-1993, Sybase was the fastest growing database company and the database industry’s darling vendor, but soon fell victim to its merger mania. For example Sybase’s 1993 merger with PowerSoft resulted in a loss of focus on its core database technology. And also in 1993 Sybase sold the rights to its database software running under the Windows operating system to Microsoft Corporation, which now markets it under the name “SQL Server.” All that said the legacy of Sybase’s foothold in the financial community remains relatively firm, Oracle nonetheless making inroads. Will Oracle step up to the plate and become an acquirer of Sybase? Who knows for sure? It would be a romantic play from Oracle’s standpoint, giving Larry Ellison the satisfaction of acquiring a (once leading) database company. Still, Sybase said on Dec 28 that its record of  ”solid overall financial execution” includes “double-digit returns generated over the past three years through revenue growth, margin expansion, targeted accretive acquisitions, and stock repurchases.”

S&P Forecasts 3 Strong Buys in 2008….Oracle being on of them. Read S&P’s Three for 2008: eBay, Corning and Oracle.

Larry Ellison is taking his second technology baby, NetSuite, public on Dec 21st. Analysts believe NetSuite’s value could be more than $1 billion, Larry and his family set to retain more than half. So what is NetSuite anyway? It’s a maker of on-demand business management software for small to mid-sized businesses. At the moment NetSuite has more than 5,400 customers. It’s concentrating on companies with fewer than 1,000 employees-which is fast growing market, and faster growing than the large enterprise market that Oracle competes in.  Now you might say there’s an inherent conflict of interest here but this is interesting. Larry will transfer nearly all his 32 million shares he controls into a “lockbox” limited liability company, where they will remain as long as he is an Oracle director. This is said to be designed to avoid future conflicts of interests. And as to Larry’s reliability, well, believe me, Larry’s going nowhere. By all accounts he’s in excellent health and is still a highly motivated leader. Anyway, his shares in NetSuite won’t count toward the election of NetSuite directors, although they count if the company is put up for sale.  Will NetSuite eventually merge into Oracle? That’s an interesting question. Only time will tell.

M&A…oh, yeah, don’t forget about licensing.

There are increasing concerns about the complex support issues needed for Oracle’s acquisition activities over the past few years (not to mention the support strategy needed for Oracle’s upcoming acquisitions).   As with any M&A activity at any company, there are a few hurdles to be jumped.  In the last few years, the issue of Oracle support stemmed from the number of different groups and specialists needed to deal with each application.

As with anything, people want easy product support.  No one cares if company A bought company B or if company C merged with company A when it comes to practical matters of keeping IT aligned with the needs of the business (you can even insert department, a group, a division or an entire global company in the place of “business”).

The fact of the matter is that more acquisitions are on the way for Oracle.  The good news is that Oracle’s Fusion is designed help fold in the various software applications acquired by acquisition.  The one thing folks tend to forget is the licensing regulations and changes that come with the acquisition….and, this is just a friendly reminder.  Software licensing is complex.  It is even more so when you throw an acquisition – whether it’s Oracle acquiring another software company or it’s your company going through the M&A.

TomorrowNow: Better Luck Tomorrow

With the woes faced by SAP and its TomorrowNow unit, it’s was no surprise to see today’s board statement on Bloomberg that the unit is “not sustainable.”  Since the resignation of TomorrowNow’s CEO Andrew Nelson last month and the Oracle lawsuit, it’s all gone downhill for the rising young company.  TomorrowNow was being bandied about as a hero.  A real David and Goliath story.  It’s too bad the hero is turning out to be a bandit.  Better luck tomorrow.