BEA flashes cash rebuff at Oracle

Oracle's stated desire for growth by eating competitors is again raising hackles, with Web architecture vendor BEA declaring it is prepared to beat off unwanted overtures from Larry Ellison's Oracle Corporation with a "poison pill" - and has $US800 million in cash on its books to add to any indigestion.

Speaking in Sydney last week BEA vice president of corporate communications Kevin Faulkner said he felt BEA was in Oracle's sights as an acquisition target and that, in the event of a takeover BEA's WebLogic customers would be forced off existing architecture platforms.

"As a publicly traded company there are some things we just don't have control over. If someone were to make a hostile offer for us, we don't have control over whether that would happen or not.

"We do have a poison pill in place. But as you've seen with PeopleSoft a poison pill doesn't stop an acquisition, it changes the dynamics. We do have a lot cash in the bank. The net cash position is $US800 million, which is pretty strong position," Faulkner said.

However, Faulkner danced around suggestions the vendor's bulging wallet was a deliberate bulwark against Oracle. Rather it was for BEA acquisitions, which Faulkner admitted did not really eat into cash reserves.

"We want that as a war chest for acquisitions. The history of acquisitions over the last two to three years has been to buy relatively small companies that provide engineering expertize to build elements of our roadmap where we didn't have expertize. Acquisition is not a big consumer of net cash, but you never know when a big opportunity might come along and we might want to strike.

"We need that cash on the balance sheet as the price of doing business against our competitors [to demonstrate] we have the financial wherewithal to outlast the recession...and continue to invest in product development through the downturn," Faulkner said.

He added that he thought Oracle was a "very good database company".

BEA's Australian managing director Laurence Cole was also spitting venom at Oracle declaring a takeover "didn't make sense".

"You'd have an uproar from independent software vendors and systems integrators of something like WebLogic that wouldn't then be available because [Oracle] would shelve it. Locally we are seeing enormous developer and end-user growth in take-up [in Asia Pacific].

Predictably, Oracle Australia spokesperson Tracy Postill did little to dampen fear of any BEA takeover but refused to cite either targets or proposed growth figures.

"We have made no bones about the fact we want to grow by both organic growth and acquisitions. We've not specified who we intend to [acquire]. The rumour mill is in overdrive," Postill said.

Meta Group applications delivery strategy analyst Micheal Barnes said there was "no question" BEA represented a takeover target for Oracle, but recommended customers focus on how BEA performed against other architecture platform competitors.

"It's a question of whether they can continue to innovate quickly and consistently against companies with far larger R&D budgets, like IBM," Barnes said.

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