Updated from 3:16 p.m. EDT
Wall Street -- the part of it that doesn't own a piece of Siebel Systems (SEBL), that is -- is less than ecstatic over Oracle's (ORCL - Get Report) $5.85 billion takeout of the troubled software vendor.
The deal, expected to close in early 2006, vaults Oracle into the top spot in the $3.45 billion market for customer relationship management software, and puts heavy pressure on rivals SAP (SAP - Get Report) and IBM (IBM - Get Report).
Despite Siebel's inability to drive new license revenue in the last two years, the soon-to-be-devoured company has an installed base of some 4,000 customers, which in the second quarter pumped $122.8 million in recurring maintenance revenue onto the top line. Services and other revenue added another $112.5 million.But those numbers don't add up to everyone on the buy side. "Did they pay too much? Any price would have been too much," says Pat Adams, chief investment officer of Choice Funds. Although Adams reacted soon after the deal was announced Monday morning, he and other investors have had lots of time to consider it. Rumors about the deal have circulated for more than a year, getting stronger as Siebel continued to weaken. Adams and other buy-side sources believe that when Oracle CEO Larry Ellison called the company "damaged goods" earlier this year, he had a point, even if he was using it to talk down the price. They say: Siebel's core product, customer relationship management (CRM) software, has become a commodity with limited growth potential. Slow-growing Siebel, they say, will put the brakes on Oracle. Oracle already has a mammoth job combining the code bases of PeopleSoft and J.D Edwards with its own into Fusion, its next-generation application platform. Adding Siebel makes it that much tougher. Siebel has a