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Monday, September 12, 2005

Siebel : The Agony Is Over; Oracle: New Challenges Ahead!!

Oracle acquires Siebel Systems in a deal worth around $5.8 billion.
Oracle said its acquisition will add 4,000 customers and 3.4 million CRM users. Oracle will offer a premium to existing market prices to close the deal.Siebel has been a subject of takeover rumors for a while, particularly since the departure of CEO Mike Lawrie. Oracle CEO Larry Ellison included the company in a list of takeover targets during Oracle's contentious battle over the acquisition of PeopleSoft. Ellison says that the addition of Siebel's customers will "strengthen our number one position in applications in North America and move us closer to the number one position in applications globally." Oracle completes one more acquisition from the stated acquisition list, BEA is the other targeted acquisition.
In a single step, Oracle becomes the number one CRM applications company in the world," as Larry sees it and he adds, "Siebel's 4,000 applications customers and 3,400,000 CRM users strengthen our number one position in applications in North America and move us closer to the number one position in applications globally." The companies put the total value of the transaction is $5.85 billion, a figure that reflects Siebel's $2.24 billion in cash on hand. Oracle said it expects the deal to add to earnings on a non-GAAP basis in its first full year. On a long-term basis, Oracle said it expects Siebel to contribute to its stated goal of 20% annual earnings growth.
Personally am sad to see Siebel go - but am surprised what would Oracle substantially benefit out of this - how would Oracle hold on to such a large customer base and how would they feel about Oracle's acquistion. I can not avoid thinking about the developments in other industries. The integration challenge increases significantly for Oracle.I personally beleive that this would benefit in an unexpected way SAP & SaaS application providers & Oracle in that order - SAP customers using Siebel shall closely begin to look at SAP CRM, nervous siebel customers may begin to look at SaaS to tide over immediate switching pains and Oracle may also benefit to an extent.

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"All views expressed are my personal views are not related in any way to my employer"