After being left for dead following what many believed was a disastrous September quarter, not only did the database giant respond recently with stronger bookings and re-accelerated growth, but Oracle's management just stunned the Street with a $1.5 billion all-cash deal for B2C (business to customer) cloud-marketing specialist Responsys (MKTG).
With the recent rise of nimbler rivals like Salesforce.com (CRM) and Workday (WDAY), Oracle has taken more than its share of criticism for its cloud position. Some might say "its lack of cloud position." Nevertheless, immediately after this deal some analysts have complained that Oracle has "reached" or overspent on the deal.
While it's true that the 38% premium from Responsys last closing seems a bit steep. However, with well over $30 billion in cash on the balance sheet this deal is not going to break Oracle. In fact, this deal is not even close to the 53% premium Salesforce.com paid for ExactTarget in its $2.5 billion all-cash deal. No one questioned whether Salesforce would get the value for which it believed it was paying. The assumption was that it would.
To that end, I believe Oracle deserves similar consideration. For the past six months, Oracle has been the Street's punching bag because it was seen as immobile. This is even though management had taken -- what I believe -- were prudent and necessary strides to grow into areas like SaaS (software-as-a-service) and Big Data too. Some of which served to fight off SAP (SAP) and IBM (IBM). It was never considered enough.