This Is Why Oracle Just Made A Huge $5.3 Billion Acquisition
This is the biggest acquisition Oracle has made since it closed Sun Microsystems for $7.4 billion in 2010 (which actually cost Oracle $5.6 billion after factoring in Sun's cash. With this deal, it actually cost $4.6 billion net of Micros' cash, Oracle said.)Oracle paid $68 per share, slightly higher than the rumored $67-and-change price expected, and a nice price for Micros shareholders. The stock had been trading near the $58 mark for the past few days and under $53 for most of April and much of May.Advertisement
Micros makes software and hardware for the hospitality and retail industries, including "point of sale" cash register tech. It has some huge clients, including the Hilton, Hyatt and Marriott hotel chains.The latest wave in the POS industry is to replace these devices with tablets, and Micros offers a Windows tablet for this purpose. So, this deal also gives Oracle a tablet.
Interestingly, Micros was already a big Oracle partner, had been helping it sell its database to hospitality businesses for the past 15 years, Oracle said.The urgency with which Oracle is evaluating solutions for the retail and hospitality industry indicates that the acquisition of Micros Systems is a defensive move to protect Oracle's install base [from] other providers such as SAP and Salesforce.com.Advertisement
But mostly, the acquisition is about buying revenue growth. The hospitality industry is in the midst of a tech revolution, moving from PC-based systems to tablets and cloud software.
In May, Micros reported third-quarter revenue of $349 million, up about 11%, year-over-year. Revenue for the nine-month period was a little over $1 billion, up 7.4% and it dropped $142 million to the bottom line as profits (non-GAAP) for the nine months of the year, so far. It also upped its guidance for the full year, expecting between $1.36 billion - $1.385 billion in revenue and non-GAAP EPS from $2.53 to $2.57."We expect this transaction to be immediately accretive to Oracle's earnings on a non-GAAP basis and to expand over time," said Oracle President and CFO Safra Catz.Advertisement
Oracle's fourth quarter and year-end was a disappointment to investors. It was a two-year-in-a-row miss on Wall Street expectations on revenue growth for both the quarter and the year.
Oracle blamed the miss on its transition to cloud services, in which revenue is recognized as it is paid, not when contracts are signed, making it look like the company's growth has slowed.Some analysts, such as TBR's Healey were good with that explanation and others were more skeptical. For instance, Pat Walravens, an analyst at JMP Securities, wrote in a research note:Advertisement
- Domestic flights resume after two months: Delhi's first departure is to Pune and Mumbai's first to Patna
- 46 more test COVID positive in Assam, total cases near 400
- Turkey confirms 32 deaths, 1,141 new COVID-19 cases
- COVID: As 2 more test positive, Hamirpur continues to have highest number of cases in HP
- Himachal COVID-19 tally crosses 200 as 18 news cases reported