Oracle Corp. (ORCL) has entered into an agreement to acquire Endeca Technologies, a leading provider of unstructured data management, web commerce and business intelligence solutions. The deal, the financial terms of which remain under wraps, is scheduled to close by the end of 2011.
Based in Cambridge, Massachusetts, Endeca Technologies is a privately held company, with over 600 customers that include Toyota, General Mills, Land O’Lakes, Aramark, PETCO and Tiffany, to name a few.
Customers rely on the platform and data management products and solutions of Endeca to correlate, search and analyze semi-structured and unstructured data. This helps the platform deliver targeted and relevant customer experiences online with advanced merchandizing and content targeting tools for web commerce.
Oracle’s acquisition of Endeca will deliver customers a unified and comprehensive technology platform that will process, store, manage, search and analyze, structured and unstructured information, thereby providing better business intelligence and better customer experience.
In accordance with the present business needs and increase in the volume and variety of data including enterprise content and application data, social media, sensor data and third-party feeds, businesses are looking for a unified solution that supports both structured and unstructured data requirements. Thus, it improves productivity, innovation and growth. The present acquisition is strategic and is intended to keep Oracle in pace with the requirements of the industry.
Our Take
We believe that Oracle has a strong product pipeline, which will drive broad-based top-line growth going forward. Moreover, rapid adoption of Exadata, Exalogic and solid growth in the software business will drive incremental top-line growth going forward. Additionally, acquisitions in the field of data management and upgrading of the cloud computing segment will be beneficial in the long term.
We expect the product portfolio to provide Oracle a competitive edge over International Business Machines Corp. (IBM) and SAP AG (SAP) in the software market going forward. However, the company is expected to face stiff competition from IBM, Hewlett-Packard Co. (HPQ), Dell Inc. (DELL) and Cisco Inc. (CSCO) in the hardware segment.
We maintain a long-term (6–12 months) Neutral recommendation on Oracle shares. Currently, Oracle has a Zacks #3 Rank, which implies a Hold rating on a short-term basis.
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