This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Oracle Acquired Acme Packet

Why Sell Now?

Despite the good future growth prospects, Acme revenues were down 10.7% in 2012 (versus 2011), due to a slower than anticipated uptake of VoLTE rollouts at various carriers. Most operators do not see VoLTE as being ready for "prime time" from a network control plane and operational perspective to justify any meaningful level of rollouts this year.

Not surprisingly, carriers such as Verizon and AT&T indicated they do not plan to deploy the technology until at least 2014, dampening the prospects for more SBC rollouts, despite some implementations done last year (such as MetroPCS (PCS)). In addition, enterprise SBC spend also grew at a slower pace (closer to 5%, as opposed to the 20% previously forecast) due to slower European sales and a shift in the US market towards spending by small and medium-sized business, which historically has not been a forte for Acme. While the overall prospects for Acme are good, as are its products, the company was faced with a longer period of slower growth, and the stock price reflected this, making the company quite attractive to Oracle.

Was That Oracle?

While the acquisition of Acme Packet itself was not unexpected, the buyer did surprise some industry pundits. Oracle, after all, is better known for its database, middleware, applications, software and hardware systems acumen than as a telecom infrastructure vendor. The purchase, though, is not the first time that Oracle has made a foray into the world of telecommunications. In February 2010, for example, the company bought Israeli startup Convergin, which provides a carrier-grade IT platform, enabling operators to evolve their service delivery capabilities at a lower total cost of ownership.

The Acme Packet product lineup fits nicely into Oracle's "Service Delivery Network" vision and will be combined as part of the various CRM (Customer Relationship Management), ERP (ERP), OSS (Operations Support System) and BSS (Business Support System) products that the Oracle Communications unit already has in its arsenal. Acme Packet will also act as a Trojan horse for Oracle, enabling the tech giant to upsell its software and IT solutions into the company's installed base. This move could be quite opportune, considering the advent of Big Data and the Cloud, which enable Oracle to pitch its analytics and cloud service architectures to telecom operators. Furthermore, there could be some interesting synergies in the service and solution integration arena, where Oracle already has some capabilities from its Sun Microsystems acquisition.

More importantly, the acquisition also signals Oracle's intent to keep enhancing its telecoms portfolio, after recently buying a variety of cloud-based startups and beefing up its service delivery portfolio via a new service broker. Now the company has made a "network edge" play, placing it at the border of enterprise and service provider networks. Time will tell what the next telecom move for Oracle will be, but we believe beefing up in areas such as SDN (Software Defined Networking) or SPIT (Service Provider Information Technology) could be possibilities.

--Written by Ron Gruia.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Ronald Gruia is the program leader and principal analyst for emerging telecoms at Frost & Sullivan. He covers NGN transitional technologies, 4G, VoIP, Broadband Access, Triple Play Services, IP telephony, Enterprise Communications Systems, among other topics. He has spoken at conferences including Supercomm, CTIA, Intel Communications Summit and VON Canada.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ALU $3.46 0.87%
FFIV $100.58 -0.37%
ERIC $7.76 0.19%
ORCL $39.24 -0.13%
VOD $32.25 0.37%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs