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It’s the buzz of the tech world, Oracle acquiring Avaya. It’s an idea that rears its head periodically among tech pundits and analysts, but raises too many questions and issues to address easily in real-world terms. Should Oracle acquire Avaya?
Silver Lake and TPG Capital LP, which took, California-based Avaya private for $8.4 billion in 2007, held some initial talks with enterprise Oracle in the first half of 2013 about a possible sell out, but the talks fizzled in the last few months.
Avaya filed for an IPO in 2011 but never make it, despite good market conditions, due to concerns over convincing potential investors about the company's growth prospects.
The efforts to sell Avaya highlight the challenges facing the private equity firms in cashing out of their investment in Avaya, which facing a brutal competition with the likes of Cisco Systems Inc and ShoreTel Inc. Avaya reported revenue of $5.17 billion in its fiscal 2012, down 7 percent compared to a year ago, while revenue for the third fiscal quarter of 2013 was $1.15 billion, down 8 percent from the year ago. Avaya has over 300,000 customers, including more than 95 percent of the Fortune 500 companies, the company’s revenue are split into two areas video conferencing devices, and services for the communications networks. Avaya delivers collaboration and communication solutions, which includes unified communications, real-time video collaboration, contact center, networking, and related solution. Avaya’s strength in enterprise would fit nicely with Oracle’s massive communications product portfolio, which includes business operations applications such as customer relationship management, service operations such as network intelligence, core network products such as its network app platform and user applications such as email and instant messaging.
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A strategic acquisition of Avaya would boost Oracle's networking offerings and better position it to capitalize on the transition to an all-IP-based network. The acquisition will also provide much better alternative for companies as they look around for UC vendors that offer more comprehensive packages. This deal appears to be a good acquisition for Oracle in its effort to expand in the UC marketplace and networking space.
Oracle has been a late comer and not been very pro-active in the unified communications market and it lagged behind competitors in terms of portfolio and technology. But recently the company has made some acquisitions; it acquired HotSip in 2006 and included some HotSip's IM and presence capabilities, the company also acquired the assets of AppForge (mobile software). Oracle appears to be trying to shore up its position in the unified communications (UC) market and data center networking space through series of strategic acquisitions rather than investment in new products, but it has not articulated a comprehensive enterprise strategy for unified communications.
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Oracle has already made some serious king-sized acquisitions before like Suns Microsystems for $7.4 billion, a move that transform the enterprise software giant into a credible hardware player as well. Xsigo Systems in 2012, a network virtualization technology provider in 2012. Oracle has acquired several large companies in its drive to out-maneuver rivals in the computing technology market, and it pretty serious when it comes to strategic acquisition.