Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nasdaq  >  Amazon.com    AMZN

AMAZON.COM

(AMZN)
  Report  
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Oracle to gain cloud clout with NetSuite deal; Ellison profits

share with twitter share with LinkedIn share with facebook
share via e-mail
0
07/28/2016 | 05:55pm EDT
The Oracle logo is seen on its campus in Redwood City

(Reuters) - Oracle Corp (>> Oracle Corporation) said on Thursday it would buy NetSuite Inc (>> NetSuite Inc) for about $9.3 billion, a deal that gives it a bigger share in the fast-growing cloud computing business and also means a big payday for billionaire Larry Ellison.

(Reuters) - Oracle Corp (>> Oracle Corporation) said on Thursday it would buy NetSuite Inc (>> NetSuite Inc) for about $9.3 billion, a deal that gives it a bigger share in the fast-growing cloud computing business and also means a big payday for billionaire Larry Ellison.

In addition to being Oracle's executive chairman, entities Ellison beneficially owns hold about 40 percent of NetSuite's shares as of February, according to a regulatory filing. These would be worth about $3.5 billion if the deal closes.

Corporate governance consultants said his links to both companies would increase scrutiny of the deal, but added its structure and strategic sense for Oracle meant it would likely pass.

"People care (about governance) when someone makes the wrong decision," said Kevin McManus, vice president of Egan-Jones Proxy Services. "But if the merger makes sense for the market, it’s going to be hard to complain too much."

NetSuite shares closed up about 18 percent at $108.41, just shy of the offer price of $109 a share in cash. Oracle shares rose 0.6 percent at $41.19.

"It's definitely pricey from Oracle's perspective, but it's understandable and it's justifiable especially in this environment," said Morningstar analyst Rodney Nelson, who noted some companies in the sector have sold for high multiples.

Oracle and NetSuite both offer software applications that help companies automate back end and administrative operations from technology to human resources.

NetSuite's chief executive, Zach Nelson, was responsible for Oracle's global marketing from 1996 to 1998.

Oracle's cloud business, which stores enterprise software and data on remote servers, lets the company sell to clients who lack the budget for on-site hardware and technology staff.

Like rivals SAP SE (>> SAP SE), Amazon.com Inc (>> Amazon.com, Inc.) and Microsoft Corp (>> Microsoft Corporation), Oracle has focused on moving its business toward the cloud-computing model as sales of traditional software licenses struggle.

The deal also could help Oracle, which is aggressively trying to build and sell more cloud-based business software, play catch up with competitors such as Workday Inc (>> Workday Inc) and Salesforce.com Inc (>> salesforce.com, inc.) that specialize in cloud-based offerings.

NetSuite on Thursday reported strong second-quarter results, with revenue up 30 percent on the year and adjusted net income that beat estimates.

Jefferies analysts said in a note the deal provides an immediate, significant entry into the mid-market for corporate applications but that "the price paid seems steep."

Oracle also has acquired companies such as Textura and Opower to increase its competitiveness in the cloud market. Morningstar's Nelson said NetSuite would be Oracle's largest purchase since PeopleSoft more than a decade ago.

The company expects the deal to add to its adjusted earnings in the first full fiscal year after it closes.

CORPORATE GOVERNANCE SCRUTINY

Oracle said the evaluation and negotiation of the deal was led by a committee of independent directors. Closing is conditional on investors tendering a majority of the NetSuite shares not owned by executive officers, directors or people affiliated with Ellison and his family.

Analysts said this structure was used to address the governance issue and increase the likelihood of its approval.

"A regulatory review and shareholder lawsuits are likely given the family’s ownership stake. However, we don’t view these as material risks to the transaction going through,” BTIG analyst Joel Fishbein wrote in a note to clients.

Paul Hodgson, an independent governance consultant, said a factor in the governance debate is whether Oracle overpaid.

"If it did, then that is a conflict of interest. If it paid what the market considers a fair price, then it’s fine," he said.

Because Ellison's ownership is all the public domain, the issue in unlikely to be a holdup for the transaction, said Peter Bible, chief risk officer at EisnerAmper Accountants and Advisors.

(Reporting by Anya George Tharakan in Bengaluru, Ross Kerber in Boston and Malathi Nayak in New York; Editing by Jeffrey Hodgson, Bill Trott and Alan Crosby)

By Malathi Nayak and Anya George Tharakan

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM -1.68% 1757.51 Delayed Quote.17.01%
E.ON SE -0.36% 8.799 Delayed Quote.1.99%
MICROSOFT CORPORATION -1.63% 137.41 Delayed Quote.35.29%
ORACLE CORPORATION -0.93% 54.55 Delayed Quote.20.82%
SALESFORCE.COM -1.42% 144.09 Delayed Quote.5.20%
SAP AG -0.16% 115.82 Delayed Quote.33.23%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on AMAZON.COM
08:57pAsian share markets cautious, pound stumbles on Brexit drama
RE
10/18MARK HURD : Oracle co-CEO Mark Hurd dies at 62
RE
10/18Boeing, J&J, dismal China data drag Wall Street lower
RE
10/18EXCLUSIVE : Electric Hummer could be part of GM's move into EV trucks, SUVs - so..
RE
10/18House antitrust probe report likely by 'first part' of 2020
RE
10/18GRAPHIC - TAKE FIVE : Super Saturday, Super Mario
RE
10/18TODAY'S LOGISTICS REPORT : Fred Smith's Growing FedEx Challenge; Seeking Rail Vo..
DJ
10/17Debt-laden Casino sees third quarter sales slow but keeps 2019 targets
RE
10/17Ford partners with Volkswagen, Amazon to build charging network for cars
RE
10/17Barneys enters deal to sell assets to Authentic Brands, B. Riley for $271 mil..
RE
More news
Financials (USD)
Sales 2019 279 B
EBIT 2019 14 832 M
Net income 2019 11 764 M
Finance 2019 33 901 M
Yield 2019 -
P/E ratio 2019 74,6x
P/E ratio 2020 52,5x
EV / Sales2019 2,99x
EV / Sales2020 2,47x
Capitalization 869 B
Chart AMAZON.COM
Duration : Period :
Amazon.com Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends AMAZON.COM
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 50
Average target price 2 263,07  $
Last Close Price 1 757,51  $
Spread / Highest target 48,8%
Spread / Average Target 28,8%
Spread / Lowest Target -15,8%
EPS Revisions
Managers
NameTitle
Jeffrey P. Bezos Chairman, President & Chief Executive Officer
Brian T. Olsavsky Chief Financial Officer & Senior Vice President
Patricia Q. Stonesifer Independent Director
Thomas O. Ryder Independent Director
Jonathan Jake Rubinstein Lead Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
AMAZON.COM17.01%869 363
WAYFAIR INC.21.23%10 083
ZOZO, INC.27.78%7 104
ETSY, INC.21.11%6 940
MONOTARO CO., LTD.9.54%6 593
B2W COMPANHIA DIGITAL32.06%6 054