10.12.07
Oracle Bids for BEA
As if acting on cue to relieve us out of our misery, Oracle finally stepped up and made its expected bid for BEA. It’s no mystery that BEA’s been an acquisition candidate, as its stock -– and new product sales -– have largely languished over the past year.
Clearly BEA has hit a wall. Each of its rivals -– from Oracle and IBM to SAP, and even JBoss -– are part of larger technology stacks that venture beyond middleware. While J2EE/ Java EE appservers are hardly a growth business anymore, Oracle and IBM have been poaching around the edges of BEA’s base, while JBoss has provided a lower cost alternative to, with Red hat, is now also part of a larger stack.
As we’re writing this on Friday morning, investors don’t think that the game is over by any means. Other potential suitors like SAP and HP have for now remained mum.
Of course, you could say that SAP is now going to be a bit preoccupied with digesting Business Objects, which as we noted, is a break in the pattern for them. As deep as SAP is as an organization and in resources, can they pull off two parallel learning experiences simultaneously? We’d be a lot more bullish had SAP done the B.O. acquisition a year ago, we just don’t think they’re ready at this point.
As for HP, can you say the word “Bluestone?” Obviously, post Mercury, HP Software is a more agile creature now, and under CEO Mark Hurd, more focused on the fundamentals. But HP Software’s focus is clearly more aimed at ITIL; BEA would likely prove a distraction and have relatively few synergies with its core Business Technology Optimization focus.
We won’t rule out competing bids by HP or SAP, but we’d assign it maybe a 10% possibility.
For Oracle the upside is more obvious as it’s clearly part of a strategy that has worked: take out or pre-empt the competition. Given its flush earnings sheets, that strategy, however messy at first, has clearly proven a winner.
So what would a BEA technology stack look like under Oracle? We believe that CEO Charles’ Phillips’ strategy of continuing to invest in existing product lines will largely be the model, with the possible exception of WebLogic Server, whose market has seen much better days. Unlike ERP systems, which are their own self-contained universes, there are standards involved here, so potential migration from WebLogic to Fusion server makes sense.
Brighter parts of the AquaLogic line, like BPM and ESB, would likely find homes under the Fusion umbrella, which is based on an architecture of federation.
And as for development tools, adding WebLogic Workshop, which has recently been updated and migrated thanks to reverse acquisitions, will provide Oracle an opportunity to rationalize its otherwise schizoid Eclipse product strategy. (Oracle is a member of the Eclipse board, leads a couple projects, but JDeveloper is clearly not going to ever be Eclipse compliant). WebLogic Workshop will become another onramp to development for the Fusion middleware platform.
What’s kind of funny is how some folks are having fun with Icahn’s $6.66 billion figure. It’s for a company whose stock symbol is BEAS.
But we’re not superstitious.