Why Oracle Made a Bid for Micros Systems

Apps & Software

Published: June 23, 2014 7:05 am

Last Updated: June 23, 2014 7:06 am

In an attempt to gain a stronger foothold in the retail and hospitality industries, Oracle Corp. (NYSE: ORCL) reportedly is nearing a deal to acquire Micros Systems Inc. (NASDAQ: MCRS). The Wall Street Journal said Monday morning the bid is for $67 a share, or $5 billion, a premium over Friday’s close of $65.77.

If the deal happens, it would be Oracle’s largest acquisition since it bought Sun Microsystems for $7.4 billion in 2009. Oracle, which was late to the cloud, has been playing catch up by launching its own cloud-based products and acquiring smaller cloud companies, such as marketing software maker Responsys Inc. Oracle has scooped nearly 100 companies over the past decade, spending as much as $50 billion.

Oracle announced last Friday that it has acquired LiveLOOK, a provider of real-time visual collaboration technology for screen share and co-browsing. Oracle already claims more than 100 customers for LiveLOOK’s technology, which will now be embedded in Oracle’s Service Cloud offering.

Oracle can use all the help it can get. The stock was hammered last week after reporting soft sales for the enterprise software maker’s most recent quarter. The company posted quarterly adjusted earnings per share (EPS) of $0.92 on revenue of $11.3 billion, falling short of the consensus estimates for EPS of $0.95 and $11.48 billion in revenue.

While new software licenses contributed $3.8 billion to fourth quarter revenues, flat with a year ago, cloud software-as-a-service (SaaS) and platform-as-a-service (PaaS) subscription revenues rose 25% to $450 million year-over-year and cloud infrastructure-as-a-service revenues rose 13%.

CEO Larry Ellison said in the earnings report, “We plan to increase our focus on the Cloud and become number one in both the SaaS and PaaS businesses.” The buyout of Micros Systems would seem to be part of the plan.

Shares of Oracle were up fractionally in Monday’s premarket to $41.19, in a 52 week range of $29.86 to $43.19.

Micros Systems shares were inactive in early trading. Shares have traded in a range of $41.78 to $70.24 in the past year.

ALSO READ: What the Oracle Bulls Want to See Now

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