Oracle has continued efforts to redefine itself as a cloud company, entered into a definitive agreement to acquire NetSuite for $9.3 billion.

Jamie Davies

July 28, 2016

2 Min Read
oracle

Oracle has continued efforts to redefine itself as a cloud company, entered into a definitive agreement to acquire NetSuite for $9.3 billion.

Netsuite is generally considered to be one of the first to make its mark on the world of cloud computing after launching as NetLedger, a web-hosted accounting software company, in 1998. The buyout completes a full circle for the business, after it received approximately $125 million in initial financial backing from Oracle Executive Chairman Larry Ellison.

Following the news of the announcement share prices in Netsuite jumped roughly 18% to $1.08, roughly the price Oracle has agreed per share, though this is almost a 30% premium on what the company was trading at the beginning of the week.

“Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever,” said Mark Hurd, co-CEO at Oracle. “We intend to invest heavily in both products – engineering and distribution.”

Although one of the more recognizable brands in the technology world, Oracle has been relatively slow off the market with regard to cloud computing. Over the last six months, the team has accelerated its presence in the space with numerous acquisitions and partnerships. Earlier this month Oracle and Fujitsu announced a partnership to deliver Oracle cloud application and platform services to Japanese customers in Fujitsu data centre’s in Japan.

The announcement comes alongside Oracle’s Q4 results where the business reported $10.6 billion, down 1% year-on-year, though its cloud software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS) businesses were up 49% to $859 million. Across the 12 months on the whole, Oracle totalled revenues of $37 billion, down 3% year-on-year, with cloud revenues up 49% at $2.9 billion.

“We expect that the SaaS and PaaS hyper-growth we experienced in FY16 will continue on for the next few years,” said Ellison. “That gives us a fighting chance to be the first cloud company to reach $10 billion in SaaS and PaaS revenue. We’re also very excited about the availability of version 2 of Oracle’s Infrastructure as a Service (IaaS) — which will enable us to speed up the growth of our IaaS business, which customers want to buy in conjunction with our SaaS and PaaS.”

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