Thursday, March 29, 2007

Oracle Introduction

By Sharon White
Oracle Corporation is the number two software company in the world. It was founded in 1986 in USA and now has representatives in about 70 countries all over the world. Its main competitors are Microsoft and IBM. Oracle consists of two businesses: software development and services. Corporation aims to provide its customers with business applications and secure database programs.

This report is prepared with interest of the shareholders as the primary stakeholders in mind. The analysis will try to cover the areas of maximization of the shareholders values.

Investors are mainly interested in liquidity and profitability of a company, what the risk factors are and what key issues the company is facing. How the management plans to handle these issues and what steps they are taking in relation to that. How they use their resources and what is their efficiency in maintaining the resources in the future for their competitive advantage.

On June 9, 2003, Oracle commenced an unsolicited tender offer of approximately $5.1 billion for all the outstanding shares of common stock of PeopleSoft Inc. which is now revised to approximately 7.7 billion. In connection to the tender offer the US dept of justice filed a civil antitrust lawsuit.

Strengths- They have sufficient cash on hand including internally available cash and investments, $1.5 billion revolving credit facility or issuance of securities to pay offer price for all shares in offer.

Weaknesses- There are doubts about the sincerity of the bid and some consider it to be a publicity stunt. PeopleSoft’s CEO Craig Conway is an ex-Oracle employee. He believes that the bid is a plan to wreck PeopleSoft’s business.

Opportunities- It can be a biggest step towards expansion by acquiring PeopleSoft with its large customer base and one of the best application software. It will also remove one of their biggest competitors in the application software business and give them a competitive advantage to other application software competitors.

Threats- If they are not successful in the lawsuit, they won’t be able to acquire PeopleSoft and department’s analysis may impact on their acquiring other companies. This lawsuit could result in substantial cost and divert the attention of the management. Even if they are successful, difficulty in integrating with the core company is a main threat.

4.2 Competition

In their core database business Oracle was having a tough competition with IBM and Microsoft which increased much more due to reduced price and improved quality offerings from competitors and decline in database software market. Oracle is planning to expand in the highly competitive market of application software.

Strengths- They have a high customer base of their database and most of the application providers depend on their database area to base their applications on. Huge cash reserves and plans to invest highly in Research & Development to have competitive advantage.

Weaknesses- Their core business of database software is already past its peak and there has been decline in this business. They don’t have much experience in other areas of software business and the market perception is of a database and tools providing company.

Opportunities- With acquisition of PeopleSoft, Oracle will become No. 2 in the application software business and will have a huge customer base.

Threats- Rapid technology changes and changing customer demands and reduced price offerings of the competitors are major threats facing the company.

The article was produced by the member of Sharon White is a senior writer and writers consultant at term papers. Get some useful tips for thesis and term paper writing .

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