What's Next on Oracle's Hit List?

So, fresh from winning a war of attrition to acquire PeopleSoft Inc. (Nasdaq: PSFT), Oracle Corp. (Nasdaq: ORCL) is flexing its M&A muscles once again (see Oracle Shares PeopleSoft Plans and Oracle & PeopleSoft: Still Work to Do).

Last night, the Redwood Shores, Calif.-based firm made a cash offer for software vendor Retek Inc. Nothing strange about this, you might think. Large firms make bids for smaller companies all the time. But there is some added spice to this one: Last week, Reteks board accepted an offer from Oracle’s archrival SAP AG (NYSE/Frankfurt: SAP). (See SAP Acquires Retek.)

The cut and thrust of the controversial PeopleSoft acquisition proved Oracle supremo Larry Ellison’s steely resolve when it comes to getting what he wants, and a similar pattern seems to be emerging here.

Oracle has increased the heat on SAP by bidding $9.00 per share for Retek, compared to the German giant’s $8.50 offer. Oracle also purchased 10 percent of Retek’s common stock earlier this week, perhaps to pour oil on the flames.

So, if Larry Ellison is hell-bent on world domination, what are likely to be the next targets? Sheryl Kingstone, program director of analyst firm The Yankee Group, believes it would make sense for Oracle to go after niche players in other lucrative industry sectors. “If they are interested in Retek, the next step is other verticals such as telecom and financial services,” she says.This could be a distinct possibility. Financial services has long been a cash cow for software vendors, and Oracle is touting its 10-gig database product as a vehicle for telecom firms to finally exploit grid computing (see Telecom Firms Grappling With the Grid and Talk America Dials Up Enterprise Grid).

Set against this backdrop, telecom billing software vendors could be appealing to Oracle, adds Kingstone.

But Gordon Haff, senior analyst at Illuminata Inc., says Oracle may well go after a software vendor that specializes in the the SMB (small to medium-sized business) space. “There’s a lot of growth going on in that area,” he observes.

Big-name vendors have been busily snapping up firms that provide products to smaller enterprises. Microsoft Corp. (Nasdaq: MSFT), for example, has made a number of acquisitions in this space, and EMC Corp. (NYSE: EMC) recently snapped up Dantz Development Corp.

(see EMC Dances With Dantz).

But there is also a possibility that Oracle has launched its bid for Retek to push the retail specialist’s price up and sting SAP. Over the last few months SAP has launched an aggressive marketing campaign to lure any disgruntled PeopleSoft customers over to its side following the Oracle acquisition (see SAP Sidles Up to PeopleSoft Users and PeopleSoft Posse Still Peeved).Whatever his motivation, Ellison is clearly spoiling for another fight. In a statement released last night he said, “Oracle’s Applications business in North America is larger than SAP’s – we intend to defend our number one position.”

— James Rogers, Site Editor, Next-Gen Data Center Forum