Oracle Buys Hyperion, Why We're Not Surprised -- plus A Couple of Thoughts on the Quarter
Oracle’s announcement last week that it has reached agreement to acquire Hyperion for $3.3 billion or an enterprise value of $2.9 billion reflecting Hyperion’s net cash position of $450 million is not surprising and makes a great deal of sense. We’re not going to review the numbers here apart from noting that the valuation looks reasonable since the basic financial elements have been widely discussed in the financial community. While we have reservations owing to the challenges of any acquisition – integrating people, offices and systems in an effective manner so as to maintain the customer base and ideally leverage the technology, we think the deal is pretty compelling. Some investors may begin to worry more about these issues given that Oracle has been on a binge that reminds us of Computer Associates buying spree more than a decade ago. Nevertheless, we think Oracle’s internal systems are best in class and that management is up to the task.
So why do we think the Hyperion deal is not surprising and a smart move on Oracle’s part?
Regarding the fiscal third quarter which ended last week, our checks have been encouraging but do not suggest a blow out quarter. Discussions with deal advisory contacts indicate a good amount of activity, but broadly represented by small and medium sized deals rather than “mega” deals. Likewise discussions with applications consultants indicate generally favorable attitudes towards Oracle, in sharp contrast to the sentiment a year or so ago and a healthy amount of activity. Finally field checks have been pretty positive. We have heard that Oracle has tightened on expenses a bit, in particular limiting travel by employees for internal meetings. We think this is a good move on several counts, first it helps contain spending, but more importantly it notably increases the time and focus on customers. Our assumption as of now is that when Oracle reports its February quarter results on March 20th that revenues and earnings will be toward the upper end of guidance.
Legal DisclaimerNothing herein constitutes an offer or solicitation to buy any security. Readers are advised to review their own financial situation, risk tolerance, and investment objectives as to any investment. Information provided here is based, in part, from sources believed to be accurate and reliable, although no representations or guarantees can be provided as to its accuracy or completeness. Blue Atlas Management, LLC is our official business entity for consulting related work. In addition, we also have a website for those of you who are interested in learning more about our services. http://www.blueatlasmanagement.com/. Please feel free to contact us at jmendelson@blueatlasmanagement.com, with any comments or questions.
0 Comments:
Post a Comment
<< Home