This deal is the product of Oracle’s attempt to boost its cloud-based software systems that are available via web and focus on aiding online retailers improve customer service. Last week, Oracle also purchased Endeca Technologies for an unannounced amount. Oracle’s acquisition, the largest since it purchased Sun Microsystems for $7.4 billion in April 2009, also indicates that Oracle’s appetite for acquisitions is strengthening once again.
Earlier this year, Oracle’s chief, Larry Ellison, said he was restraining his check book and focusing on organic growth because assets were “wildly overpriced.” While the company has made several acquisitions this year, it has largely focused on smaller, privately held companies.
I think that by this growth and organic growth, Oracle will be able to pool their resources and strengthen their market position, as well as their financial stance with their specialised and knowledgeable workforce and have access to a greater customer base in order to succeed. As Oracle is interested mainly in small acquisitions, it means that there is a low level of risk in acquisitions; however, this may limit their scope for growth and high profit, as high risk results in higher profits and benefits. As shown in Figure 1.1, the combined assets of the recent acquisition will give a figure of $74.27 billion, which will make them the biggest company in the Software industry. On the other hand, the combined liabilities would equal to a heavy figure of $33.27 Billion, which means that the company would be in debt to other and will have to insure that the debt is payed off from their retained earnings or by liquidising their assets and perhaps, calculating their Leverage Ratios to measure the degree to which they rely on borrowed money, in order to respond to cash flow issues.
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| Figure 1.1 |
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