Today: A year after its last big cloud acquisition, Oracle (ORCL) picks up San Bruno's Responsys to better challenge Salesforce and other rivals. Also: Stocks gain ahead of Facebook's pricing of secondary offering.
The Lead: Oracle buys Responsys to further boost cloud offering
Still struggling to find a shower of cloud riches, Oracle resumed an acquisition spree Friday that had paused so far in 2013, acquiring San Bruno-based Responsys for a total of about $1.5 billion, the Redwood City software giant's third software-as-a-service acquisition of more than $1 billion.
Oracle agreed to pay $27 a share for Responsys, a total of $1.5 billion that slips to a total outlay of $1.39 billion when factoring in the cash that Responsys has on hand. Responsys's marketing-focused SaaS offering will merge with the complementary cloud-marketing product Oracle acquired in its $800 million deal for Eloqua, which was coincidentally announced exactly a year before the purchase of Responsys.
"Oracle customers will benefit from continued R&D investment across the Responsys and Eloqua platforms," Oracle executive Thomas Kurian said in Friday's announcement.
Oracle made similar deals in 2011 and 2012, when it snatched up RightNow Technologies for $1.5 billion and Dublin-based Taleo for $1.9 billion, and has sought to supplement those purchases with deals for companies such as Involver, Instantis and Vitrue. The goal was to better battle rival Salesforce, a pioneer in the cloud-computing space, and more targeted cloud companies like Pleasanton's Workday, who were stealing customers as founder and CEO Larry Ellison doubted the demand for cloud software.
The result is Oracle's suite of cloud-software services, which debuted in mid-2012 with Ellison proclaiming it "the most comprehensive cloud on planet Earth." The rate of cloud acquisitions had slowed to basically nil in 2013 as Ellison and co-President Mark Hurd focused on sales of its cloud software.
However, Oracle has yet to show a lot of gains from more than two years of big-money cloud efforts. New software and cloud-subscription sales declined slightly in the company's most recent quarter and UBS analyst Brent Thill pointed out this week to Bloomberg News that Oracle is on track to post less than 5 percent growth in new software license sales two years running.
"The pure-play software-as-a-service vendors are accelerating their momentum," Thill said, characterizing Oracle's path as "a gravel road right now -- it's not smooth,"
While Hurd played up a sharp rise in bookings, calling it "the first indicator" for future cloud revenues, the company obviously saw a need to build up its marketing offering, which Forrester Research analyst Rob Brosnan called "clearly the most important battleground for technology providers over the next decade" in a Friday interview with The Wall Street Journal.
"Investors want Oracle to put more fuel in the growth engine," FBR Capital Markets analyst Daniel Ives told Bloomberg.
After Oracle's earnings report sent the company's stock to its highest prices since the dot-com bust Thursday, shares dropped 0.6 percent to $36.37 Friday, while Responsys -- the 122nd largest technology company in Silicon Valley -- jumped 40 percent to $27.33 to more closely mirror the price Oracle agreed to pay. Responsys rival Marketo, which commanded $13 a share in an initial public offering earlier this year, gained 11.3 percent to $36.62 after FBR's Ives speculated that the San Mateo company will be a target for Oracle rivals like SAP or NetSuite.
SV150 market report: Stocks gain, new Facebook stock costs $55.05
Wall Street experienced strong gains Friday as the latest reading of U.S. economic growth showed the third quarter was the strongest since 2011, which was backed up with strong numbers in California's labor market. Silicon Valley companies also gained before Facebook announced the selling price for a secondary offering that will bring billions to CEO Mark Zuckerberg and his chosen charities.
Facebook, which fell after announcing its secondary offering Thursday, gained 0.1 percent to $55.12 Friday, then announced after the bell that it would sell 70 million fresh shares for $55.05. At that level, the offering will take in a total of $3.85 billion, with Zuckerberg's stock sale reaping $2.28 billion and the company receiving $1.49 billion. Zuckerberg plans to provide the proceeds from 18 million shares to charity, and that total stands just short of $1 billion, at $990.9 million.
Facebook rival Twitter ended the week by returning to record highs, moving as high as $60.25 before closing with a 4.4 percent gain at $60.01. Google (GOOG) also established all-time highs Friday, breaking $1,100 for the first time and closing with a 1.3 percent gain at $1,100.62 despite Europe's top regulation official saying that the Mountain View company's proffered concessions were not enough to avoid antitrust charges. Apple (AAPL) reversed recent losses, gaining 0.8 percent to $548.70 while focusing on improving its Maps app, and Tesla Motors (TSLA) gained 1.9 percent to $143.41 after defending itself against reports of its equipment possibly causing a garage fire. Yahoo (YHOO) dropped 0.2 percent to $40.12 after Katie Couric announced she would leave her talk show after the current season as she prepares to move to the Sunnyvale company, and Intel (INTC) fell 0.3 percent to $25.06 despite a report that the Santa Clara chipmaker is developing a killer new PC chip. Outside of Silicon Valley, Blackberry spiked 15.5 percent to $7.22 despite announcing a gigantic $4.4 billion quarterly loss.
The SV150 index of Silicon Valley's largest tech companies: Up 10.5, or 0.72 percent, to 1,474.43
The tech-heavy Nasdaq composite index: Up 46.61, or 1.15 percent, to 4,104.74
The blue chip Dow Jones industrial average: Up 42.06, or 0.26 percent, to 16,221.14
And the widely watched Standard & Poor's 500 index: Up 8.72, or 0.48 percent, to 1,818.32
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.