I’m predicting a relatively quick end to the silliness over at BEA, with BEA’s executives, prompted by a little medicine from Dr. Icahn, acquiring enough temporary sanity to accept whatever second offer Oracle is willing to give them. At which point the charade will be over and BEA will become Oracle’s latest prize.
The reason this deal will be over soon is as clear as the lackluster value of BEA’s stock since the initial Oracle deal was pulled – a stock price that was kept in double digits over the years only because everyone expected that it would eventually be sold, most likely to Oracle. The fact that as of this writing the stock is hovering just under the $17 limit of Oracle’s bid reflects the hope that Oracle will come back with its original offer.
That hope may be misplaced: Oracle can now play a wasting game with the stock, and probably emerge as the buyer with a price somewhat south of $17. It’s apparent two weeks after the initial offer that no deal better than $17 will ever emerge. If a better offer were in the cards, don’t you think a deal-maker like Icahn would have already made it happen? His threats against the BEA board indicate that even a consummate wheeler-dealer like Icahn can’t come up with a better deal.
So it will be over soon, mercifully soon I hope. So what happens once BEA gets folded into the Oracle tent? Here’s two things that will definitely happen, and one that won’t.
One thing that will happen is that BEA customers will be granted the same stay of execution that Oracle’s other acquisition customers have been given: A largely unlimited timeframe in which to stay on their BEA software while paying Oracle maintenance. Mind you Oracle is already doing this for BEA customers: there’s no shortage of Weblogic customers already in the Oracle customer base, thanks to its PeopleSoft, JDE, and Siebel acquisitions, and these customers are already well-supported through Oracle’s Applications Unlimited strategy. Those customers who aren’t already Oracle customers will be eased into the fold with little or no disruption.
The second thing that will happen is that BEA’s employees, which along with the customers is the major reason that Oracle wants the company, will feel very much at home at Oracle. It finally dawned on me recently that Oracle’s M&A strategy has succeed on the personnel front largely because the biggest acquisitions have all been of companies whose headquarters are within a short drive of Oracle’s headquarters. The common Silicon Valley culture these PeopleSoft, Siebel, and now BEA employees share trumps any “localized” version that may have been cultivated in Redwood Shores all these years.
Finally, the thing that won’t happen is that BEA will infuse any significant new technology into Oracle’s Fusion Middleware. That product line is moving along very well, so well that one of the key components, Application Integration Architecture, may actually be so good at orchestrating processes between existing Oracle applications that customers could be turned away from deploying Fusion Applications when they come out next year.
Don’t take my word for it, Charles Philips, Oracle’s president, confirmed the “problem” at a meeting with industry analysts last week. Insofar as upgrading existing customers to Fusion Applications isn’t expected to entail any net new revenues for Oracle, the fact that AIA might stall Fusion Apps sales is fine with Charles and his fellow execs. So it may turn out that Fusion Applications biggest “delay” in the market could be caused by Fusion Middleware’s success.
But I digress. Oracle Open World, which debuts November 11, may see a huge influx of new BEA customers – even if the deal isn’t inked by then, my recommendation is that any BEA customer wanting to know who their new vendor is should stop by San Francisco’s Moscone Center and take a look. The only bad thing about the consummation of this deal it is that the shareholders may have been denied their best price. But why not? BEA’s top execs managed to box the company into a dead-end strategy years ago, why should they show some enlightened thinking now?