Oracle (NYSE:ORCL) Makes Cloud Acquisition with Purchase of BigMachines
NEW YORK – On Wednesday, Oracle (NYSE:ORCL) announced the acquisition of BigMachines a company that develops and implements on-demand software solutions. While the terms of the deal were not announced, sources have confirmed that the deal was in the ‘hundreds of millions’ or roughly five times BigMachine’s annual revenue. In 2012, BigMachine’s revenue was $ 58 million, and they were on course to double their revenues this year.
The move seems to be a play by Oracle to flank Salesforce (NYSE:CRM) who was an early investor in BigMachines. According to sources, Oracle’s interest in BigMachines was due to the company’s positioning which would help Oracle to jump-start an enterprise cloud product called Configure, Price, and Quote (CPQ). CPQ helps companies put together complex bids, quotes and proposals for customers. Oracle already has its own CPQ product, but it’s classic software, not a cloud product. In addition, BigMachines, give Oracle access to Saleforce’s customers, as about half of BigMachines customers were Saleforce users. In fact, Big Machines Express is built on Salesforce.com’s software cloud, Force.com.
In recent years, software vendors such as Oracle, SAP (NYSE:SAP), IBM (NYSE:IBM) and Salesforce have been aggressively acquiring smaller vendors that deliver software as a service. According to Forrester analyst Liz Herbert these smaller software providers often sell solutions to specific problems — acquiring them and integrating them into larger offerings could help reduce complexity.
In reference to the deal, BigMachines co-founder and former chief executive Godard Abel said ‘after dismissing the cloud as “water vapor” a few years ago, Larry Ellison and Oracle seem to have realized they are behind on the cloud and that it is important to large enterprises. Acquisitions are the best way for Oracle to catch up.’
The move is bound to be well received by investors who in recent quarters have taken a dim view of the Oracle’s results. Year-to-date shares are up, but only slightly and the company has lagged behind the broader market. Shares of Oracle were trading up 1.38 percent on Thursday at $ 33.18.