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Maturity Gives Firms the Urge to Merge: ORACLE, SYMANTEC, ADOBE MAKE MAJOR ACQUISITIONS

Posted on: Monday, 10 April 2006, 09:00 CDT

By Therese Poletti, San Jose Mercury News, Calif.

Apr. 10--Silicon Valley software companies were swept up in a wave of mergers in 2005, as the industry matured and continued to consolidate.

Three large local software firms on the SV150 -- Oracle of Redwood City, Symantec of Cupertino and Adobe Systems of San Jose -- grew by making multibillion-dollar acquisitions of other software companies.

Database software giant Oracle has been on a shopping spree over the past two years. Oracle, the seventh-largest company in Silicon Valley in 2004, jumped to No. 5 in 2005 after completing its $10.6 billion hostile takeover of PeopleSoft.

With PeopleSoft, Oracle bulked up in applications software, used to run functions like human resources and finance. Earlier this year, Oracle completed a $5.85 billion purchase of Siebel Systems of San Mateo, a maker of software used by salespeople to manage contacts and deals.

"In the tech landscape, there is pretty broad consolidation," said Charlie Chen, a Needham & Co. enterprise software analyst. "When a market slows down, you need to have fewer vendors, or the vendors don't have any pricing leverage. That is part of Oracle's and Larry Ellison's strategy -- to take the dynamic of cutthroat price competition out of the market."

Symantec, the maker of anti-virus and security software, swallowed Veritas in a $10.2 billion deal in July. Through its merger, its calendar 2005 revenue grew 49 percent but profit in that period dropped 70 percent amid hefty acquisition charges.

Adobe, maker of software for creating and handling digital documents, completed a $3.4 billion purchase of Macromedia in December.

Mergers are expected to continue. Already this year, Oracle purchased open source software firm SleepyCat, and Symantec acquired Relicore, a data center software maker, and IMlogic, a developer of corporate instant messaging software.

Takeovers will remove some companies from the Silicon Valley 150 list next year. Siebel will disappear, as will Serena Software, which went private in a $1.1 billion buyout by private equity firms.

Contact Therese Poletti at tpoletti@mercurynews.com or (415) 477-2510.

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Copyright (c) 2006, San Jose Mercury News, Calif.

Distributed by Knight Ridder/Tribune Business News.

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NASDAQ-NMS:SYMC, NASDAQ-NMS:ADBE, Unknown:NED, NASDAQ-NMS:SRNA,

Source: San Jose Mercury News

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