Oracle Closes Its Wallet

After stumping up over $11 billion to buy PeopleSoft Inc. and Retek, Oracle Corp. (Nasdaq: ORCL) is on a break from M&A activity, CEO Larry Ellison said on the company's earnings call Tuesday night (see Oracle Reports Q3 Results).

Ellison, ever keen to steal a march on rivals IBM Corp. (NYSE: IBM) and SAP AG (NYSE/Frankfurt: SAP), fought an 18-month war of attrition against SAP to win PeopleSoft and this week outbid SAP for retail specialist Retek (see Oracle Takes Control of PeopleSoft and Oracle Acquires Retek).

All this M&A movement has prompted plenty of speculation about who is next on Ellisons shopping list. Industy analysts cite software vendors in lucrative telecom and financial services verticals as possible targets (see What's Next on Oracle's Hit List?).

But Ellison says the firm is now taking a pause to catch its breath: “We don’t envision doing a major acquisition until we've had a couple of quarters under our belt for PeopleSoft."

Safra Catz, Oracle’s co-president and interim CFO, explained that the integration of PeopleSoft is proceeding apace. “We are well on our way and well on track,” she said. “We have completed a large part of the integration and expect to be complete in the next six months.”Catz said she expects Oracle to finish merging the companies’ facilities this quarter, having already brought PeopleSoft’s sales teams into the fold. “PeopleSoft’s sales teams have been introduced to Oracle’s products and procedures and shown a detailed roadmap on how to sell,” she added.

In the aftermath of the PeopleSoft acquisition, Oracle execs focused on the company’s non-GAAP results last night. Non-GAAP earnings were 16 cents per share on revenues of $3.09 billion. This was up 28 percent from 12 cents in the same period last year.

Analysts had estimated earnings of 15 cents on revenue of $3.07 billion, according to Thomson First Call. The company’s non-GAAP results were 10 cents on revenue of $2.95 billion, reflecting $249 million in restructuring costs and other charges stemming from the PeopleSoft buyout.

Catz indicated the PeopleSoft acquisition will pump up Oracle's new software licensing revenue, which hit $270 million last quarter. ”We will see the strength in new license revenue growth from the acquisition beginning [this quarter],” she added.

But the market did not respond positively to the results. In early trading this morning, Oracle shares fell 3 cents or 0.24 percent to $12.46.— James Rogers, Site Editor, Next-Gen Data Center Forum