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Here We Go Again: Oracle, Yawn, Said To Have New Target

Now, before you believe the rumors that Oracle has an offer of $5 billion on the table, consider the facts around both companies that would tend to paint this as an unlikely scenario, at least for the short term. Oracle, fresh from its monumental battle to swallow PeopleSoft and its more recent bidding war with SAP that netted it Retek, is already in frenzied integration mode. It's got a mountain of PeopleSoft customers it will have to support for the next eight years. It already has not only its own nascent CRM application, but also PeopleSoft's much more mature CRM product.

Siebel, meanwhile, just replaced its CEO, is run by a man who, by all accounts, considers Ellison to be a close relative of Beelzebub, and has $2 billion in cash that it surely wouldn't want to include in a $5 billion deal, especially given its current market capitalization of $4.63 billion.

None of this is to say the deal wouldn't make sense in some regards. Siebel has been struggling for the past couple of years and just posted one of its worst quarter in years, missing its license revenue projection by as much as $45 million, and is need of oxygen. It's got a lineup of customers Oracle would be happy to scoop up, it's got vertical-market expertise in several industries that would fit nicely with Oracle's emerging vertical strategy, and it would instantly make Oracle the de facto market leader in CRM. (And we all know how much Ellison likes to be the top dog.) And not to be underestimated is the pressure shareholders are putting on the company to do SOMEthing--buy back stock, make acquisitions, sell, anything that will fuel shareholder value. (Siebel's stock rose nearly 5% Friday on news of the acquisition rumors.) Meanwhile, Oracle president Chuck Phillips said this week that the company remains actively in search of acquisition targets.

But until some real facts emerge, it would be premature to dismiss the public statements that have come from Tom Siebel. For one thing, he's made it clear that Oracle would not be at the top of his list of preferred suitors. Last fall during a speaking engagement at an event in Silicon Valley, Siebel told a story of how in 2002 Ellison had contacted him to propose buying Siebel (the company), making it the lynchpin of an apps business Ellison was thinking about spinning off, and putting Siebel (the man) in charge of the whole shebang. Siebel said he summarily rejected the offer because he felt he and Ellison had spent enough time together already.

While Siebel Systems' business conditions have changed since then, Tom Siebel's lack of interest in being acquired has not. And it is that reluctance to give up his baby, says Beagle Research Group analyst Denis Pombriant, that's more likely to drive Tom Siebel's decisions than the potential riches Oracle might be offering. "I might sound naive, but Tom is on record in front of his whole company about two weeks ago saying the company is not for sale," Pombriant told me. "I don't think you replace your CEO if in the short term you're talking to Oracle about selling the company. Why bother? It's just more upheaval."

I wouldn't presume to rule out anything when two such impulsive personalities as Larry Ellison and Tom Siebel are involved, but when all the known truths are considered, I can't help but think this rumor is more fiction than fact.

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