Oracle Acquires Acme Packet With An Eye On The Networking Market

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Oracle ( ORCL ) has entered into an agreement to acquire Acme Packet ( APKT ), a leading provider of voice, data and unified communications services, for $1.7 billion or $29.25 per share. Acme Packet's solutions are currently deployed by more than 1,900 service providers and enterprises all over the world, including 89 of the world's top 100 communication companies. This acquisition will boost Oracle's communication services portfolio. Acme Packet's software basically integrates phone systems into the technology infrastructure of a company which can then be used to transmit and manage phone calls using the same technology as Internet communications. This acquisition is likely a push by Oracle into the software defined networking market.

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Software Defined Networking

Networking giants like Cisco and Juniper Networks dominate the software defined networking space with virtualization leader VMware making an entry into the space as well. Acme Packet's software is key in Oracle's plan for this market, and we can expect Oracle to add this feature into appliances running on Oracle's existing line of Sun computers. Oracle is expected to build a new line of networking equipment running on Sun servers with Acme Packet's software as an integral part of the system.This market is a growth opportunity for Oracle as the software defined networking market is poised to become a $2 billion market by 2016, according to IDC.

We expect these acquisitions to drive Oracle's cloud business in the future, and we currently have a $40 Trefis price estimate for Oracle , which currently stands nearly 10% above its current market price. Database, middleware and application software accounts for nearly 80% of its value, while enterprise server and storage hardware accounts for more than 10%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: APKT , EMC , ORCL , SAP , VMW

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