Today: Oracle follows through on biggest acquisition since Sun Microsystems and Google spends more than $500 million on a company for the second time in two weeks as acquisitions stay hot at end of second quarter. Also: Tesla Motors helps push Silicon Valley tech stocks to a gain.
The Lead: Oracle buys Micros Systems as merger madness continues
Silicon Valley's recent rash of big-money acquisitions does not seem to be abating, with Oracle announcing its biggest bet in five years Monday, following a sizable Google investment late Friday and another Avago purchase of a Silicon Valley chip company.
Oracle confirmed earlier reports of its interest in Micros Systems by committing about $5.3 billion to the purchase of the Maryland company, which produces software for point-of-sale systems at retailers, hotels and other brick-and-mortar businesses. Oracle agreed to pay $68 a share for the company, valuing it at roughly $4.6 billion; the larger $5.3 billion figure includes Micros' cash reserves.
The deal is Oracle's largest since the Redwood City software giant purchased Santa Clara's Sun Microsystems in 2009, though Oracle has been a serial acquirer of smaller companies in the intervening years, including a shopping spree for cloud-software companies that has helped it go from avoiding software-as-a-service offerings to the world's second-largest cloud-software provider. Monday's purchase is not a bet on the future of cloud software but on the reliability of Micros revenues, analysts said: With sales of more than $1 billion a year, Micros will help boost Oracle's revenues, which received poor grades in the company's most recent earnings report.
"It is clear to us that the company needs to quickly put more 'growth fuel in its engine' to catalyze growth in the top-line," FBR Capital Markets analyst Daniel Ives told Reuters. Ives added that he expects Oracle to enter another cycle of acquisitions to build its software portfolio, saying, "We could see them spending $15 (billion) to $20 billion in acquisitions over the next one to two years."
Oracle isn't the only tech company with its checkbook open: Late Friday, Google announced its second acquisition of more than $500 million in less than two weeks. The Mountain View-based Internet giant agreed to buy Dropcam, a San Francisco company that produces small cameras that can be accessed remotely from mobile devices for home security, for $555 million. As a sign of how fast Google's acquisition train is rolling, the purchase was made by Nest Labs, which Google agreed to purchase for $3.2 billion earlier this year in a deal that still hasn't officially closed, and follows the $500 million purchase of Skybox Imaging. Reports on Monday also suggested Google has acquired Palo Alto video-search startup Baarzo for an undisclosed sum.
Silicon Valley companies can be acquirees as well as acquirers, as Avago proved once again Monday. The Hewlett-Packard semiconductor spinoff, which is headquartered in Singapore, announced the acquisition of Sunnyvale chip firm PLX Technology in a deal that values the company at more than $300 million. Avago is not new to such a deal, as it purchased San Jose chipmaker LSI for $6.6 billion in late 2013.
The rapid pace of acquisitions involving Silicon Valley's largest tech companies is unlikely to subside, with the companies starting 2014 with its largest cash pile in recorded history. Specifically, Goldman Sachs analysts believe Silicon Valley companies that manufacture equipment for use in telecommunications could be ripe for picking as Sprint and T-Mobile head toward an expected merger: The investment bank lists several Bay Area hardware firms as possible targets, including Juniper Networks, Infinera, Gigamon, Ruckus Wireless and Silver Springs Networks.
Oracle stock gained 0.7 percent to $41.10 Monday, and Micros Systems -- which jumped toward the acquisition price after Bloomberg News first reported talks between the companies last week -- gained 3.4 percent to $67.98. Google jumped 1.4 percent to $574.29 while focusing on growth for its Google Glass wearable computers, expanding sales of the device outside the United States for the first time and introducing fashionable versions designed by Diane von Furstenberg; the company is also reportedly interested in moving into the domain-registration business. PLX Technology gained 9.1 percent to close at $6.48, near the $6.50 per share acquisition price Avago agreed to pay.
SV150 market report: Silicon Valley stocks gain as Wall Street stalls
Wall Street's main indexes barely budged Monday, but Silicon Valley tech stocks clocked a gain thanks to improvements by Tesla Motors and other companies.
Tesla added 3.3 percent to $237.22 after Morgan Stanley analyst issued a report Friday calling the Palo Alto electric car maker "arguably the most important car company in the world." A Monday morning note was not as kind to the company, however, with Barclays analyst Brian Johnson writing that Tesla's May auto sales show a need for the company to ramp up sales in the final month of the quarter to meet expectations. CEO Elon Musk's other Silicon Valley company, SolarCity, moved 1.5 percent higher to $70 as the Wall Street Journal examined the San Mateo company's complicated financials.
The social-networking sector received some bad news, as a Gallup poll suggested that users don't consider themselves susceptible to social advertisers' charms, though the ability to interact with customers could prove fruitful. Still, Silicon Valley's two biggest social-networking advertising sellers gained Monday, with Facebook increasing 1.4 percent to $65.37 as Sterne Agee analyst Arvind Bhatia praised the Menlo Park company's prospects, and Twitter gained 0.7 percent to $39.52 while denying blocks on certain Russian accounts. Silicon Valley's chip hierarchy is being challenged by a push from Nvidia and Applied Micro into supercomputing chips, a sector owned by Intel, according to a Wall Street Journal report; Intel added 0.1 percent to $30.23, while Nvidia dropped 1.2 percent to $19.71 and Applied Micro fell 1.3 percent to $10.93. Yahoo dropped 1.2 percent while showing off a new all-in-one mobile app spawned from its acquisition of Aviate; tongues were wagging after the trading session closed because of a WSJ report that said CEO Marissa Mayer overslept for a meeting with important advertising executives last week.
Up: Yelp, Splunk, Pandora, Tesla, Zynga, LinkedIn, SolarCity, Google, Facebook, VMware, Workday, Hewlett-Packard, Salesforce, Twitter, Juniper, Oracle, Applied Materials
Down: AMD, Yahoo, Nvidia, SunPower, Electronic Arts, Cisco, Gilead
The SV150 index of Silicon Valley's largest tech companies: Up 4.2, or 0.28 percent, to 1,493.75
The tech-heavy Nasdaq composite index: Up 0.64, or 0.01 percent, to 4,368.68
The blue chip Dow Jones industrial average: Down 9.82, or 0.06 percent, to 16,937.26
And the widely watched Standard & Poor's 500 index: Down 0.26, or 0.01 percent, to 1,962.61