On Salesforce’s earnings call Thursday night, CEO Marc Benioff took his usual potshots at competitors—at IBM(IBM), at SAP(SAP), but most often at Oracle. For example, Benioff said, “I think we’ve mostly seen Oracle actually fail in the cloud market, I mean, for a long time, Larry said that the cloud was ridiculous and then he started taking it more seriously, but I just haven’t seen any competitive cloud solutions from Oracle.”
Ouch.
Benioff and Larry Ellison, executive chairman and CTO of Oracle (ORCL), have made baiting each other an art form over the last few years.
In 2011, for example, Ellison/Oracle rescheduled a Benioff keynote at Oracle OpenWorld at the last minute, causing Benioff to claim he’d been cancelled and leading Benioff to move his speech offsite. Benioff has called Oracle’s cloud strategy a joke—decrying in particular Oracle’s hardware-oriented “cloud in a box” strategy. I’m paraphrasing here, but you get the point.
So Benioff’s comments about Oracle “failing” at cloud were sharp and amusing (check out the transcript if you want the play-by-play) but nothing new. And, it’s doubtful that, as some pundits believe, these theatrics would derail an Oracle acquisition of Salesforce.com if the price was right and both companies were motivated enough. Sure there’s overlap in their respective businesses. Both companies offer enterprise software for sales and other functions, but Salesforce blazed the trail with its subscription-based software, and Oracle is still trying to catch up.
Neither Oracle or Salesforce would comment for this story.
After all, over the years, Benioff has also said that his interactions with Ellison are all in good fun and he has repeatedly called Ellison his mentor. Benioff spent 13 years at Oracle before co-founding Salesforce with Parker Harris. Oh, and Salesforce(CRM) runs on Oracle databases and middleware. So there’s that.
There were no questions about possible M&A on Thursday’s call, whereas last quarter rumors about Microsoft and Salesforce talking up a deal were all over the place.
But to me, Oracle always seemed to be a better fit for Salesforce. Should Ellison decide that the dual-CEO-strategy with Safra Catz and Mark Hurd isn’t working out, he might just go for an acquisition that would put Benioff, his erstwhile mentee, in charge.
Make no mistake: This would be pricey. Salesforce’s market cap is north of $45 billion. But then again, Oracle has nearly $55 billion in cash, and any purchase would bring it $1 billion in Salesforce cash. You do the math.
With Oracle shares now trading about 18% off their high this year, the pressure’s got to be on. And as someone who once swore Oracle would never succeed in buying PeopleSoft, I’ve learned to never say never when it comes to this company.
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