That's the key, I think, behind all big deals Oracle will make in the next couple of years: how will Ellison seek to flesh out his optimized-systems model? And that's why my top two votes for his next M&A targets go to EMC and Netezza.
EMC would give Oracle some of the world's most-advanced storage technologies as well as enormous advances in its own virtualization capabilities via VMware and security via RSA. While Ellison has lavished praise on Sun's server technology, EMC is the global leader at a time when the widely heralded "information explosion" is forcing businesses to rethink their storage strategies to handle the unprecedented volumes of data and information that today's intensely wired world is creating.
We've also seen how VMware is looking to move beyond virtualization and into the broader areas of enterprise architecture and infrastructure management, both of which could be ideal extensions for Oracle, which bills itself the "information company."
Then there's Netezza, the data-appliance specialist fresh off a blowout quarter in which it not only continued to grow rapidly (revenue up 45% to $63.8 million) but also showed it could do so profitably, as its net income more than quadrupled to $3.2 million from $700,000 in the year-earlier quarter.
That provides three primary attributes Ellison would demand:
(a) Presence in a strategic market: from its inception, Netezza's been in the optimized-systems business.
(b) The ability to grow: The 45% growth rate is appealing but beyond that is the strategic positioning behind that growth, as described by CEO Jim Baum in the company's earnings announcement late last week: "Our customers and partners continue to embrace our value proposition and technology. We are excited about our opportunities as we continue to help organizations maximize their use of high-performance data analytics to make critical time-sensitive decisions, predict future events, and dramatically enhance the way they do business."
(c) The ability to generate increasing levels of profit out of that growth: CFO Patrick Scannell said Netezza's raising its guidance for the year to 30% annual growth and that while "we will continue to invest across the organization during the second half of the year," the company also expects to see "operating-margin improvement year over year."
And finally, here's one more guess at Oracle's next target, but this one's from out on the fringes: RIM, the maker of the Blackberry smartphones. Oracle's got a fairly serious hole in its product line when it comes to mobility-specific tools and technologies, and with arch-rival SAP's recent purchase of Sybase, SAP is now better-equipped to help customers create highly mobile enterprises.
While RIM certainly has its challenges, it would provide Oracle with immediate credibility, resources, and technologies in the hugely important mobile market.
Don't forget to check out Jannise's complete list of poll results regarding possible future Oracle acquisitions and his graphical representation of Oracle's past acquisitions here.
Bob Evans is senior VP and director of
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