Tom Foremski is reporting that a "reliable source" indicates that "Salesforce.com has approached Oracle to gauge if there is any interest in a sale at $75 a share."
At first glance it would appear strange for Marc Benioff, who has long trumpted his software-as-a-service (SaaS) model as the "death of software," to be offering his firm for sale by to the world's second largest enterprise software vendor.
But Foremski thinks the deal makes sense for several reasons. Apart from the obvious synergies of Oracle's market presence with Salesforce.com's technology, he also points out that Benioff appears to be losing interest in his current job and has been selling an enormous number of shares recently. He also speculates that Benioff would make a great candidate to replace Ellison, whenever Larry sees fit to retire.
There was a time when I would discount rumors such as this one. But after watching Oracle for the last five years, I rule nothing out.
It would certainly launch Oracle to the front of the on-demand market. Oracle's only true multi-tenant SaaS offering is the online CRM offering it picked up from Siebel, which was a fraction of the revenue from Siebel's on-premise product line. Oracle's main on-demand offering is simply its traditional E-Business Suite, offered on a single tenant hosted basis. Oracle has been touting this model as superior to the multi-tenant model lately, but to me it smells of "if you can't fix it, feature it."
There's one other big plus for Oracle. Buying Salesforce.com would take the wind out of the sails of SAP's recent launch of its own on-demand offering, Business by Design. With SAP making such a strong move into the SaaS market, can Oracle afford to appear as a laggard?
Update, Feb. 12: Salesforce.com's share price was up nearly 8% yesterday on the rumor of its interest in a deal with Oracle.
Upon further consideration, however, it seems to me there are two possibilities, both of which are problematic:
1. Contrary to Foremski's assertion, the source is not reliable. The rumor could be a ploy by someone interested in pumping up the share price.
2. Foremski's source is reliable. If so, and the source has factual knowledge of a $75 per share offer from Salesforce.com, then the source is disclosing insider information.
Either way, the SEC should investigate.
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