To nobody’s surprise it finally happened. With no other white knights in the offing, as we expected, Oracle sweetened its $17/share offer for BEA to $19.75. It came after 3 months of initially vocal, then quiet wrangling. Oracle made its $17 offer back in October; BEA’s top management held out for $21; minority investor Carl Icahn told BEA, “Get real!”; BEA chimes in with better than expected results a month later (seems like a lot of the Q4s have come in ahead of the street; more about that in a moment); both parties go quiet; then today news breaks in the wee hours that Oracle has upped its bid to $19.375.
So both parties save face – BEA gets more, Oracle gets it below the magical $20 level.
So let’s get onto the next item on the list: Sun buying MySQL, followed by early disclosure of Q4 results later in the day. Does anybody see a pattern here? IBM also charmed the street the day before yesterday. But of course the Q4 numbers come after a year where IT spending was unusually bullish — reflecting long-delayed recovery from 9/11 and the fact that the rest of the world is at a different point in its economic cycle than the U.S. is. The conventional wisdom is that the Q4 numbers are the calm before the storm, as the impact of the US downturn will show up in Q1.
Our early take is that Sun has also done a bit better than expected in Q4; it is obviously a bigger company than the other logical suitor Red Hat and could afford a fatter payout; in the end the deal will have more headline than economic value as the point about MySQL is that it is a low cost/no cost alternative to Oracle. Like Java, it will give Sun possession of a de facto standard; like Java, the margins for MySQL will be a drop in the bucket on Sun’s bottom line; unlike Java, there is a business model for MySQL, but it’s more in sync with a company that’s a fraction of Sun’s size.
Film at 11.