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by Vault Consulting Editors | February 17, 2009


Circuit City shoppers aren't the only ones taking advantage of crazy sales. Software and services giant Oracle has been more than tempted by bargain-priced, privately held firms, having picked up 10 (and counting) in the past year alone -- including Advanced Visual Technology Ltd., Skywire Software, AdminServer Inc. and, most recently mValent Inc.

But don't take these purchases at face value -- it's not that Oracle is rife with cash while the rest of the economy is tanking. In fact, the firm posted diminished income for the year. The money it's shelling out for these acquisitions is coming from its saved up cash, thanks to a few years of 20%+ sales growth.

The shopping spree goes along with Oracle's overall strategy of being able to offer smaller, more affordable niche offerings to specific industries (not to mention cutting its own costs and bringing in new revenue streams) -- many of the acquisitions it's made over the past year-and-a-half are aimed at boosting its offerings for insurance companies and government social services agencies. This strategy makes sense, what with depressed tech spending on big-ticket items ("luxuries") these days. On top of that, with diminished private equity and venture capital investments in tech firms, Oracle might be the best thing for cash-strapped small firms right now. The company "is the new IPO," declares Jon Fisher, who sold his own company, Bharosa Inc., to Oracle in 2007.

But not all firms are willing to settle for less. As I wrote last week, BearingPoint has been looking for possible suitors, but is unwilling to sell if the price isn't right?or at least close to right. But on the verge of running out of funds, it's unclear how much flexibility BearingPoint has. Rumors continue to swirl about an impending BearingPoint sell-off (as soon as next week?) or a bankruptcy filing. Satyam, too, is taking its time shopping around. The WSJ yesterday reported that the firm has been approached by a number of companies, among them Indian engineering and construction firm Larsen & Toubro, which holds a 12% stake in the company, HCL Technologies Ltd., the Hinduja Group, Tech Mahindra Ltd. and Spice Group. But Satyam may not have time for window-shopping, either, since it's unsure whether it has enough cash to last it until the optimal buyer comes along.

And while we're on the subject of Satyam, how about a little update? The firm has brought on Deloitte and KPMG to help with the internal investigation (which may turn up some Raju-like behavior on the part of PwC, Satyam's auditor in crime) and to figure out just how much dough it has -- seems like a reasonable request. Today, two senior executives resigned as the investigation heated up. In more positive news, Satyam's stock did rise a bit after India?s stock market regulator said it will relax takeover rules for companies where the government replaces the board as part of a rescue plan. And, the firm is apparently on track to restate its finances by the end of March. That is, unless someone else somewhere in upper management has another little secret. Nothing would surprise me at this point.


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