Two big tech acquisitions got announced today. One I understand; the other not so much.
Oracle took out Siebel in a deal that has been rumoured several times over the past months. This may well be the last big acquisition in the wave of consolidation that has been underway in the enterprise application software market for a couple of years now. There will be more deals before this wave of consolidation ends, but they will likely be smaller, more vertically-focused extensions and add-ons to the product lines of the remaining major players. All two or three of them. This must be bittersweet for Tom Siebel. Larry Ellison has just added to an already massive multi-dimensional integration project: integrating organizations and integrating product lines and technology from Peoplesoft, Retek, ProfitLogix, and I-Flex with Oracle. Still, this transaction takes out the largest single player in the high-end enterprise CRM application market and continues Oracle's drive to best SAP as the leader in applications. They are not there yet but they are clearly on a mission.
The other transaction, and the one I must admit I don't grok the logic of, is eBay's acquisition of Skype. People who have thought about it include Om Malik, James Enck, and Ross Mayfield. Ross says the logic is simple - I still don't quite see it. One thing does seem clear to me though. I've read some things indicating that the Skype management team and investors had a choice of a totally up-front buyout or a deal structure with up-front cash plus a performance-based earn-out. They took the earn-out, with $2.6B up-front and the potential to earn another $1.5B over the next 3 years. If it's true that they had a choice and settled for the earn-out, then it's clear that at least those folks see the logic and potential in the combination of companies. It will be interesting to track the performance of this combination over the next couple of years.
Recent Comments