Oracle Puts BI Sector Into Play

Oracle buys Hyperion Solutions for $3.3 billion:
“The fact that Oracle has added another tool in their toolkit isn’t going to make SAP customers become Oracle (customers),” he said in an interview.

Actually, if those Hyperion customers are also SAP customers and then Hyperion gets acquired by Oracle… well then they do become Oracle customers.

BTW, the deal is actually $2.9 billion in net valuation when you take into account Hyperion’s cash. The good thing for the BI sector is that despite the sector sucking air as a group, the valuation of this deal is actually at a premium to the other deals Oracle has done. Hyperion is being valued at 7.4x maintenance, versus about 6.5x for Peoplesoft and Siebel. But let’s not mince any words here, Hyperion was the premium play in this sector and now it’s off the market… another missed opportunity.

Consolidation in BI has been long coming but with BO and COGN relatively weak I wouldn’t expect SAP to be a buyer; there will be too much internal conflict arising from the fact that one reason why BO and COGN are weak is that SAP BW is actually doing well. In the end, I think my former employer misses a big point that while it’s all well and good to focus on top line revenue growth, which there hasn’t been much of for 2 quarters, what Oracle is doing is consolidating a market in order to drive earnings growth in the near term, trending to 20%. Whether or not the long term aspirations of license growth materialize, if these acquisitions pay for themselves in earnings then Oracle still wins.

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