) is the largest player in the database software market, but
the company also sells middleware and applications software. The
company competes with Microsoft (
) and IBM (
) in the database software market, and also SAP (
) in the applications software market. After acquiring Sun
Microsystems in early 2010, Oracle became a hardware player as
well, selling enterprise servers and storage hardware. In this
market, Oracle competes with IBM, EMC (
), NetApp (NTAP), HP (HPQ) and Dell (DELL).
Oracle has made a number of acquisitions over the last few
years. Here we analyze Oracle's cash position and whether it allows
Oracle to make a few more strategic acquisitions in order to grow
its business. We estimate that Oracle's software products account
for 86% of the company's stock value. Our price estimate for Oracle
stock stands at
, roughly 17% above market price.
See our full analysis and $38.16 price estimate
Oracle's Cash Position Allows for More
Oracle has made a number of acquisitions in the past, of which
we've listed a few key examples below.
Oracle has a roughly $25 billion cash balance on its balance
sheet, including cash, cash equivalents and short-term marketable
securities. Oracle also has a significant amount of debt (around
$17 billion) on its balance sheet, which means its net cash
position is around $8 billion. However, if Oracle can make use of
the cash balance to make acquisitions instead of paying off debt,
it could open up a lot of strategic opportunities.
Could Salesforce.com be One Such Opportunity for
Salesforce.com's (CRM) market cap is around $19 billion,
and Oracle could utilize its large cash balance towards a possible
acquisition attempt. Salesforce.com is a cloud computing player
that specializes in providing client relationship management (CRM)
as well as other applications. The cloud computing space is an area
expected to generate substantial growth over the coming
years. Oracle is not currently a major player in the cloud
computing market and hence Salesforce.com could provide it with
ample growth opportunities in applications software.
Additionally, Salesforce.com has recently forayed into the
database software market with the introduction of cloud-based
database software named database.com. Oracle is already the
dominant player in this market but could leverage Salesforce.com's
technical expertise in the cloud market to become an even bigger
player in the database software market.
Do you foresee any other acquisitions on the horizon for Oracle
that could raise its growth prospects and generate significant
return on the company's current cash balance? Let us know your
thoughts by providing feedback in the comment box below.