I do love a good takeover rumour - they can liven up the quietest of news days in February. This week's little gem is about the future/fate of Salesforce.com.
The admirable - and impeccably well-connected - Tom Foremski over at Silicon Valley Watcher has some juicy scuttlebutt about apparent negotiations between Oracle and the SaaS firm over an acquisition priced at around $75 a share.
Foremski's rationale is that such a move would provide Oracle with "a strong brand in online apps and a strong transition road map to cloud computing and a software as a service business model". It would also, he reckons, give Salesforce.com CEO Marc Benioff a new interest and a role as Larry Ellison's heir apparent.
Culturally, the notion of an Oracle/Salesforce.com tie up is fairly credible. Many of the Salesforce.com senior management have Oracle backgrounds, including Benioff himself of course. I've often said that Salesforce.com 2008 reminds me a great deal of Oracle circa early 1990s - just without the dodgy book-keeping.
That said, there might be a few problems in the way. First up seems to me to be Oracle's stance on 'cloud computing'. Ellison was very dismissive of the sector in Oracle's last quarterly conference call. Talking about SAP's pitch into the space with Busines ByDesign, Ellison said:
“We’ve elected not to go into the small business market because we don’t see any synergy with our existing business, which sells to medium and large scale businesses. Our existing customers tend to be large companies or medium/large companies. If we were to go and sell it to small business, it’s a new set of customers requiring a new sales force requiring a new product. There is just no leverage, no synergy. It’s a business that we don’t think is right for Oracle."
Clearly we need to balance these comments out with (a) his essential desire just to take a few more pot shots at the Germans and (b) his personal interest in the SaaS space. After all, Ellison provided seed funding for Salesforce.com in the first place and is of course a majority shareholder in its rival NetSuite. SaaS may not officially be of much interest to Oracle, but it has certainly caught Ellison's eye (and wallet).
The fact that SAP and Microsoft are making mid-market SaaS plays - albeit both in their own limited and overly-cautious ways - might mean Ellison is thinking it's time for a pre-emptive strike. An Oracle-backed Salesforce.com might just be a big enough stick to batter SAP back up to the enterprise. And just in case SAP does manage to break into the mid-range market, being behind the Oracle frontline might look like a good place for Salesforce.com to be.
(On a wider scale, you'd also have to also wonder what the future would be for NetSuite - or at least for Ellison's continued investment in NetSuite.)
The other idea about a Benioff-succession to Ellison's chair just doesn't stand up to scrutiny, much as the notion appeals to me. There have been many Oracle heir apparents before, none of whom have stayed the course - yes, that's you we're looking at Gary Bloom! (There's also the question of Oracle co-president Charles Phillips and what his reaction might be to buying in a Larry-succesor!)
But most importantly, I just can't see any sign to indicate that Larry's going anywhere anytime soon. A couple of years ago he was talking about having another ten years in the job so any presumed heir apparent might well have a long time to wait.
Still, Salesforce.com as Oracle's SaaS division? Certainly not impossible, but bear in mind that last year there was a huge amount of speculation that Google would be buying up Salesforce.com, speculation that initially at least benefited the Salesforce.com stock price, but ultimately resulted simply in a technology tie-up between the firms.
Salesforce.com's quarterly results are due out at the end of this month which means the firm is going to be particularly tight-lipped about making any comments on this rumour until then. But Benioff and Co. can start rehearsing their remarks on this one now as it will clearly be top of analysts things to ask about on the 27th.