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Oracle Looking to Acquire: Is Autonomy a Candidate

October 12, 2008

ITWorld ran Chris Kanaracus’ “Ellison Strikes Bullish Tone at Shareholder Meeting” contained a reference to Larry Ellison’s view that the economy can help Oracle grow. You can read the ITWorld story here. Bloomberg.com picked up on the point. In Vivek Shankar’s and Rochelle Garner’s story “Oracle Holders’ Vote Shows Dissent on Ellison’s Pay” here, this comment caught my attention:

Ellison said today he plans to boost profit with stock buybacks and acquisitions. He owned 1.15 billion shares as of Feb. 15, according to Bloomberg data. “We are better positioned than our peers, the other software companies, to do well in tough times,”‘ Ellison said, referring to the credit and financial market crises. “There are opportunities to make acquisitions that would cost less.'”

The notion of taking advantage of the cratering of the financial market and its subsequent shock waves triggered my speculative gene this fine Saturday morning in rural Kentucky. Here are the highlights of the notes I jotted down as I watch the geese, wolves, and other beasties frolic in the misty hollow:

  1. Oracle has not made much visible progress in information access–also known as search–in the last 18 months. Could Oracle reignite its passion for Autonomy. Autonomy has a beefy customer base, OEM “annuity” revenue, and a foot in the door in the eDiscovery sector. You can click here to see the dip in Autonomy’s share price in the last week. If the shares continue to drop, Autonomy could become affordable. Prior to the crash, the share price made the company financially unpalatable according to my back of envelope calculations.
  2. Could Oracle start buying Google partners who are gaining traction? I was surprised to learn that Oracle is selling Google Search Appliances. I don’t have much detail about this tie up, but if the Google Search Appliance is able to drive more Oracle consulting and application revenue, why not roll up some of the partners. Adhere Solutions, a hot partner, is one example of a candidate for this type of play. Some Google partners are listed here.
  3. Oracle R&D has not had the impact on the expanding data management market that companies like Aster Data and InfoBright have had. InfoBright has hooked up with Hewlett Packard, and it might be time for Oracle to start thinking about next generation data issues from an angle that is more agile that the traditional Oracle database.

I had several other thoughts. The theme in my speculation is that Oracle is going to have to take some positive action because my research suggests that a roiling of the traditional database world may be coming. The trigger point may be none other than Oracle’s neighbors in Mountain View, California. Google, based on my analysis of some 2007 and 2008 technical papers, may be poised to pull a leap frog in enterprise data management.

Will Oracle buy search, partners and service firms, data management, or move in some other direction? I don’t know, but if the company wants to take advantage of the present financial climate, Oracle will have to move before even more severe shocks rock the landscape.

Stephen Arnold, October 11, 2008

Written by Stephen E. Arnold · Filed Under Business strategy, Enterprise, News, Search, Technology 

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