Diverse Acquisitions For Oracle

Gartner may have projected a grim view of global IT spending this year by reducing growth projections to 3.7% over the year compared with earlier estimates of 4.6%. But technology giants like Oracle don’t seem to be too concerned. After a rather disappointing second quarter, Oracle reported an impressive third quarter performance. To make things better, the company continued to announced much-needed acquisitions.

Oracle’s Financials
Oracle’s (Nasdaq:ORCL) revenues of $9.06 billion, grew 3% over the year and were ahead of the market estimates of $9.02 billion. EPS of $0.62 was also ahead of the market’s projected earnings of $0.56 for the quarter.

Revenue growth was driven by new software license sales, which grew 7% over the year to $2.37 billion. Software license update and product support revenues grew 8% to $4.07 billion. Oracle’s hardware sales continued to decline as revenues slipped 13% over the year to $1.48 billion. Database and middleware revenues grew 10% over the year to $4.49 billion, and applications revenues grew 4% to $1.93 billion. Service revenues during the quarter remained flat at $1.14 billion.

For the current quarter, Oracle estimated revenues of $10.6 billion-$11 billion, compared with market estimates of $11.1 billion. Projected EPS of $0.78-$0.83 was also ahead of the Street’s estimates of $0.73.

Oracle’s Acquisitions
Oracle continued to make several acquisitions as part of their SaaS and cloud computing growth plans. Within SaaS, the RightNow acquisition reported earlier this year was just a first step. Recently, they finally acquired Taleo, a move I was expecting several years ago. Oracle bought the human resources software provider for $1.9 billion. Taleo ended last year with revenues of $237.3 million and provides their solutions to more than 5,000 organizations. Analysts believe that the talent management market will grow 12%-15% annually. The acquisition will help Oracle strengthen their portfolio to compete with SAP, which acquired SuccessFactors at the end of 2011. Competition in the space is heating up as Workday, another interesting option, plans to go public this year.

Within cloud computing, last week they announced plans to acquire ClearTrial. Chicago-based ClearTrial is a developer of cloud based clinical trial operations software. Their software solutions help biopharmaceutical and medical companies run clinical trials of new drugs. The move will help Oracle expand their cloud-based Health Sciences Suite by being able to add the planning stage to their offerings of clinical trial management.

The year is still young, and I am waiting to see what other companies Oracle bags in 2012. For now, their stock is trading at $29.16 with a market capitalization of $145.1 billion. It touched a 52-week high of $36.50 in May 2011.