In order to strengthen its communications portfolio,
) recently acquired Tekelec for an undisclosed sum. This is
Oracle's second acquisition in the communication segment after
Acme Packet in Feb 2013 for $2.1 billion.
Tekelec provides network signaling, policy control, and
subscriber data management solutions for communications networks.
Tekelec's services help in measuring the use of data in broadband
and mobile networks. The technology is being used by more than
300 customers across 100 countries, including the likes of
and T Mobile.
The combination of Oracle's existing set of communication
services and Tekelec's services and solutions will deliver a
comprehensive solution that will enable service providers to
rapidly build and install communications service, improve
operational efficiency and control network resources.
Moreover, with the combination of both Tekelec and Acme
Packet's technologies, Oracle is expecting to take advantage of
the rapid growth in the use of mobile devices and wireless data
management demands from the networking companies.
Year to date, Oracle has acquired 3 companies and we expect
Oracle to continue pursuing strategic acquisitions of technology
start-ups that can be easily combined with its product lines.
These acquisitions will help Oracle to expand its customer base
over the long term. The strategic acquisitions will also help
Oracle to reduce competition by eliminating rival products going
However, we believe that competition remains stiff for Oracle,
which will limit its growth potential going forward. Oracle's
hardware business continues to decline, putting massive pressure
on the software side to perform consistently in order to drive
growth. In such a scenario, competition from
) in the network communications segment and sluggish IT spending
will hurt profitability going forward.
Currently, Oracle has a Zacks Rank #3 (Hold).
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