Oracle to buy software firm ProfitLogic
By agencies   |   Wednesday, 06 July 2005, 19:30 IST
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SAN FRANCISCO: Oracle Corp. on Tuesday said it is buying private retail software maker ProfitLogic for undisclosed terms in the latest in a string of deals by the world's No. 2 software company to raise the performance of its applications business through acquisitions. Oracle, the leading maker of database software, is looking to boost its role in supplying applications that run on top of databases, as it competes with rivals such as SAP and International Business Machines Corp. Oracle shares traded up slightly after hours after initially dipping almost 1 per cent after the proposed acquisition was announced. ProfitLogic makes software that helps retailers make more accurate sales forecasts and pricing decisions by analyzing customer demand patterns. ProfitLogic, based in Cambridge, Massachusetts, has about 250 employees and around 30 customers, including upscale department store Bloomingdale's and the Toys R Us retail chain. ProfitLogic and Oracle declined to provide financial details about ProfitLogic's business, but AMR Research estimates the company will have between $40 million and $50 million in revenues in 2005. Oracle's proposed deal is expected to close by the end of July. It follows four other Oracle takeovers this year, including its $11.1 billion acquisition of rival PeopleSoft and two other privately held software makers. Bruce Richardson, a senior software analyst at AMR Research in Boston, said the deal helps Oracle boost its software product offerings in specific industries, such as retail and financial services. The proposed deal will be Oracle's second recent buyout in the retail software "vertical," or industry, segment after it bought Retek in the spring for about $700 million. Buying small companies also avoids the integration risks associated with large acquisitions, Richardson said. "This is not a surprise. They want to flesh-out their vertical strategy ... (Buying) ProfitLogic allows Oracle to either integrate the products or sell them on a stand-alone basis," Richardson said. Oracle and ProfitLogic executives said in a conference call that most ProfitLogic customers already use either Oracle's database or at least one of Oracle's application products. Oracle said most ProfitLogic executives and employees will likely be retained. Redwood Shores, California-based Oracle is the world's biggest database maker, but is hoping to undercut market leader SAP in the market for software applications that automate business processes such as payroll, pension benefits and demand forecasting. ProfitLogic has been funded by companies such as Bain Capital Partners and JP Morgan Partners.

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