
Oracle Buys NetSuite for $9.3B - flinner
http://www.bloomberg.com/news/articles/2016-07-28/oracle-buys-netsuite-in-deal-valued-at-about-9-3-billion
======
chollida1
> The relationship between Oracle and NetSuite goes back decades. Zach Nelson,
> NetSuite’s CEO, previously ran Oracle’s marketing operations in the 1990s.
> Oracle co-founder Larry Ellison is NetSuite’s largest investor. As of March,
> Ellison and his family owned about 45.4 percent of NetSuite’s common stock,
> according to a company filing. Ellison has “control over approval of
> significant corporate transactions,’’ according to the filing.

Hmm, I wonder if the NetSuite board will approve this:)

Man, Microsoft has its OS and Office revenue to

Google and Facebook have their advertising revenue

Oracle has its licensing revenue

Amazon has its everything store revenue.

Apple has its iPhone revenue.

The big tech incumbents all figuratively print money each quarter.

If the long reported bubble burst ever gets around to happening, it's hard not
to see them as the big winners. With piles of cash on hand and cash reserves
growing can anyone make the case that they don't become the lender of last
resort to cash strapped startups?

Side note, I'm surprised that Oracle is still running with Safra Catz and Mark
Hurd as co-CEO's. I figured that that setup along with a very strong willed
founder in Ellison, would cause some spectacular implosion at some point:)

~~~
ethbro
Can't Amazon, Google, and Facebook (less sure about the others) all
essentially be characterized as Berkshire Hathaway?

I.e. Develop a business that generates large cash flows, then relentlessly
plow that money into more profitable side ventures. Except in this case they
didn't buy an insurance company and instead developed a product that generated
those flows.

~~~
mikeryan
I think you're missing the way Warren Buffett and Berkshire invests.

He takes low risk, profitable companies with proven track records and strong
management teams. Geico, Fruit of the Loom, building products and materials
etc. Its a very different mindset then what Google is doing when it invests in
self driving cars.

Every company thats profitable re-invests those profits in some way. Trying to
lump the way Google or Amazon uses their excess cash is different then the way
Facebook does (Facebook builds moats mostly) and definitely different then the
way Berkshire does.

~~~
ethbro
My main point on making the comparison was the scale at and frequently with
which it's done rather than the investment strategy.

(1) Core technology & monetization -> (2) Cash Flow -> (3) M&A to Fuel (1) ->
(4) Goto 2

Looks different at that size than it does for smaller entities. And if you
have a revenue stream generic enough to feed on a variety of inputs, then you
have huge flexibility in what you can purchase. And you can likely afford to
pay more because you've got efficiencies of scale on your side (including
access to hyper-scale amounts of data).

~~~
arohner
What you've described looks more like Amazon's strategy. It's probably more
correct to say Google & Facebook are copying Amazon rather than BH.

The core of BH has ~20 employees. Warren Buffet always calls out his
subsidiary CEOs for doing a great job, because BH couldn't exist in its
current format if he had to manage day-to-day operations in any subsidiary.

The steps in Buffet's algorithm are the same, but the emphasis is different.
Amazon _builds_ moats and cashflow, while BH _buys_ stable companies that
already produce cashflow. BH doesn't need moats, only profit. Amazon, Google,
FB need both moats and profit.

Buffet's algorithm looks more like:

    
    
      - (1) Identify stable, profitable businesses that WB understands
      - (2) if they're a good bargain, and it moves the needle on BH stock, buy
      - (3) goto (1)

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ryporter
Did Larry Ellison just transfer billions of dollars from himself to himself in
a taxable transaction? I'm surprised the deal was all cash.

~~~
unreal37
One could argue that Oracle's money is not technically his. This is how he
gets a large share of Oracle's money into his own personal accounts without
having to give other shareholders anything.

~~~
Eyght
I'm calling it now. If this deal goes through Larry Ellison will buy a huge
new boat.

~~~
toyg
Larry Ellison will buy a huge new boat regardless of this deal. It's just what
he does.

~~~
us0r
Or purchase the other half of Malibu he doesn't own

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DoubleMalt
At least it is not a software I use an like, that is devoured by Oracle this
time.

(Of course Oracle makes great stuff. In a company as big as Oracle, there are
always niches that create great things. But most offerings are dreadful. And
most open source acquisitions did not fare especially well under Oracle)

~~~
cowmix
VirtualBox has done quite well under Oracle.

~~~
morgo
MySQL has done well also.

Disclosure: I work on this team. Take a look at new features in 5.7 for
example:
[http://www.thecompletelistoffeatures.com/](http://www.thecompletelistoffeatures.com/)

~~~
stephenr
.... Oracle bought a domain name just to list the new features in a minor
version release?

I know MySQL doesn't use Semver at all, and I know the domain probably cost
3/5 of fuck all, but still...

~~~
morgo
I bought the domain name.

It's not a minor release.

MySQL predates semver. It is not alone here (see Mac OS X; PostgreSQL etc.).
But you will be happy to hear that the next version will be called 8.0.

~~~
stephenr
5.7... to 8..

Oh right, Oracle. Like how Java 1.5 became Java 5, eh.

Is >=8 going to be Semver?

~~~
morgo
6.0 was a canceled release.

7.x. is used by Cluster.

8.0 is the next number along, and makes it easy to follow as "it just drops
the 5".

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HenryTheHorse
This news is interesting because with NetSuite's acquisition, it leaves no
_significant_ SMB SaaS player for SAP or MSFT to acquire immediately. All eyes
are on their next announcement.

Anybody got a few hundred million sitting around and wants to build another
SaaS ERP/SCM solution? :)

~~~
thomasjudge
Microsoft bought Great Plains software several years ago which was SMB focused
(renamed as part of Microsoft Dynamics); they say this is available in their
cloud, I don't know if that's real or not, or how it stacks up competitively

~~~
mbesto
Except GP doesn't have a SaaS offering...it's just a hosted version by MS
partners.

~~~
jrs235
Microsoft Dynamics 365 is coming soon: [https://www.microsoft.com/en-
us/dynamics/dynamics-365?WT.mc_...](https://www.microsoft.com/en-
us/dynamics/dynamics-365?WT.mc_id=azurebg_ENAzureNewsletter_July)

From their email newsletter 3 days ago:

Microsoft Dynamics 365 available later this year

Available this fall, Microsoft Dynamics 365 evolves our current CRM and ERP
cloud solutions into one cloud service with new purpose-built apps to help
manage specific business functions, including: Financials, Field Service,
Sales, Operations, Marketing, Project Service Automation, and Customer
Service. Dynamics 365 apps are designed so they can be easily and
independently deployed. That means you can start small and pay only for what
you need. Yet they work together seamlessly so, as your business demands, you
can grow into additional capabilities with ease. For more information, visit
the Official Microsoft Blog.

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markpapadakis
On perhaps unrelated note, I think it'd be important for NetSuite to make sure
their site's up the day Oracle buys them out, otherwise it 'd make both them
and Oracle look bad. (
[http://www.netsuite.com/portal/home.shtml](http://www.netsuite.com/portal/home.shtml),
click on Free product tour - Oops )

~~~
ayyn0n0n0
Working for me at the moment.

~~~
markpapadakis
Excellent. I was genuinely interested to learn about their product.

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mr-ron
Larry Ellison owns 45.4% of Netsuite Stock.

This means he is aiming to make $3.75 Billion from this trade.

Holy crap.

~~~
raiyu
Larry Ellison is a very interesting business leader. From reading accounts
looks like he is a very dynamic business leader inside of Oracle. Certainly
there are both positive and negative interactions. But he was also supportive
of some of his top people leaving to start their own companies that have gone
on to do really well. Often times he would invest into their businesses and
personally capture upside.

On a long enough time line many of those businesses also went on to become
direct competitors. So not surprised to see that he has a stake in the
business, though have 45% is pretty amazing.

~~~
thansharp
Can you name his competitors?

I can only recall Salesforce, although I don't know the extent to which their
offerings overlap.

~~~
toyg
For the record, Salesforce was founded with Larry's money by Larry's employees
-- pretty much like NetSuite, in fact.

------
tw04
I would imagine we'll continue to see Oracle acquire mature software companies
that are built upon their database. It makes a ton of sense for them - they
instantly cut the primary cost of the business (Oracle licensing). Quite
frankly the Oracle licensing alone will probably justify the purchase price.

As long as it isn't a startup where the braintrust instantly fleeing makes the
product essentially worthless, it makes sound business sense.

~~~
tuna-piano
I don't think this makes any difference at all (besides possibly tax
reasons... I'm no expert). I wouldn't think there's much operational synergy
between owning a customer.

But you seem to imply a financial reason. Say Netsuite's Oracle fee was $1M a
year. If Oracle acquires them, Netsuite saves $1M a year sure, but Oracle also
loses $1M year in external revenue. The result is the same.

~~~
tw04
For starters, they aren't paying a not-so-insignificant portion of that GP to
a sales guy. There are absolutely tax benefits to it. And finally they don't
have the cost of support, which can be quite large, of taking care of an
external entity.

------
hackaflocka
I've never understood why Oracle was so highly valued by Wall St. Databases
have always had FLOSS alternatives. So how did an expensive proprietary
solution (with lots of closed and open competitors) become so all-powerful and
valuable?

On a related note: anybody on here want to work on some kind of innovative
enterprise database startup? (I don't have any ideas, I just want to work on
one because I see a lot of potential).

~~~
rlucas
Oracle hasn't been a "database" company for a long, long time now. (You can
license the RDBMS but that's not the real business.)

Yes, they have a very robust database. But what they've been selling to
enterprises for at least 20 years is better thought of as ... schema.

When you buy Oracle Financials (or whatever modules / pieces / etc.) what
you're buying is "how to set up and run your business." All of the non-
physical parts of your business operations are now entities inside Oracle SW
(and, as it happens, stored in the Oracle RDBMS, too, but that's practically
speaking irrelevant).

Once you're "on" Oracle, or SAP, or whatever, every invoice you send out
exists only because it's in that software. The software is your system of
record, your single point of truth for your whole enterprise. You might think
you are physically a human employee or a box of nuts but if you're not entered
into Oracle with a row ID, you don't exist.

So, yeah, Oracle has an RDBMS. But what they really have is the "operating
system" or the "schema" of a large enterprise which otherwise would have to
rely upon a vast pyramid of specialist operational knowledge (bureaucrats /
paper pushers / functionaries) in order to know how invoices got approved,
sent, dunned, paid, reconciled, etc., or how orders got quoted, approved,
picked, packed, shipped, etc.

(Not meant to sound condescending; I certainly wouldn't have known had I not
spent some time seeing Oracle deployed in real life. It was certainly super-
instructive for me to have spent a summer during college working for a midsize
enterprise on Oracle, in a role kind of bridging ops and IT, and seeing what
it really did. No SELECT statements involved.)

~~~
hackaflocka
Fantastic explanation. Thanks.

What are some promising open source efforts out there to create such a
universal schema?

~~~
gvb
Odoo, formerly known as OpenERP

[https://en.wikipedia.org/wiki/Odoo](https://en.wikipedia.org/wiki/Odoo)

~~~
hackaflocka
I also found webERP.org

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mark_l_watson
At first I thought this purchase was a "holy batshit batman" event, but
because of ""Oracle, which sells software to big corporations, has been trying
to shift to cloud-based products, which made up only about 8 percent of total
sales in its fiscal fourth-quarter."" then I guess it makes sense.

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oriel
Am I the only one looking at the NetSuite patent list and trying not to
foresee Oracle's next move.

Ref: [http://stks.freshpatents.com/Netsuite-
nm1.php](http://stks.freshpatents.com/Netsuite-nm1.php)

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godzillabrennus
Seems like a perfect marriage. The oracle cloud transition is a work in
progress from what I can tell so this solves part of that problem for them.

------
weavie
On a slight, but related side note, is there a way to stop Chrome from auto
playing audio when you first open a web page?

I'm supposed to be working here - not surfing Hacker News!

~~~
brianwawok
Volume on mute is clutch

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kordless
We're seeing brutal, brutal consolidation now. Better buckle up.

