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Oracle selling US$10 billion in bonds, giving hint to buying spree

Chris Kanaracus | July 2, 2014
Oracle is selling US$10 billion in bonds, in a move that could signal the vendor is planning to ramp up its already steady pace of acquisitions.

Possible targets include Jasper, which sells an IoT software platform for connected devices. Jasper was recently valued at US$1 billion, which is no small sum but chump change for Oracle.

Jasper competes with the likes of Axeda and Aeris Communications, both of which could present additional acquisition targets. In any case, the acquired company would have to be aligned with Oracle's current IoT stack, which includes Java Embedded and Fusion Middleware, among other components.

IoT spans many areas of technology and raises new questions about the future of networking and security. Oracle could invest in these areas as well as part of an IoT push.

Big data and analytics

A big promise of IoT is the insights companies can draw from the oceans of data generated by sensors, mobile devices and other endpoints. The challenge is how to get those insights in front of line-of-business users quickly and presented in an easily understood, interactive manner.

This is the speciality of data-visualization providers such as Tableau and Qlikview. While Oracle already has visualization software of its own, an acquisition could be geared toward providing an offering to midmarket customers, rather than the large enterprises that use products such as Oracle Exalytics, Endeca and BI Foundation Suite.

On the other hand...

It's important to note that Oracle "doesn't need to borrow money to do an acquisition," said analyst Frank Scavo, managing partner of IT consulting firm Strativa. "Oracle has quite a bit of cash on hand." Indeed, Oracle had nearly $18 billion in cash and $21 billion in marketable securities as of May 31.

With the bond issue, "it may simply be that Oracle is doing a bit of financial engineering to take advantage of historically low interest rates," Scavo said. Oracle's announcement stated that the money might also be used for stock repurchases, which could help its share price, he added.

Still, with five acquisitions announced so far this year alone, expect Oracle to keep its merger-and-acquisition machine churning, whatever the financing method it chooses.

 

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