Quite the day for the world's second wealthiest software magnate. In what's been a turbulent U.S. equity market, Larry Ellison enjoyed not one, but two financial boons today:
- Oracle reported stellar Q2 financial results last night after the close; showing the world that, once again, his vision of consolidating the enterprise software industry is working. And those assailing the plan as a means of masking slowing organic growth are having to resort to the New Math in order to keep singing that song at this point. Database and middleware grew 30% in the Q; which is the best number I can recall from the company in at least 10 years [if anyone feels like confirming that as fact, I would greatly appreciate it].
- And then NetSuite, a company I've discussed quite a bit over the years, listed shares today at $26 per share, significantly above the thrice raised proposed offering range. As if that weren't enough, the stock rallied sharply late in the day to close the day at $35.50. In the process, that puts NetSuite's market capitalization at an astounding $2.1 BILLION.
Assuming the underwriter's exercised the over-allotment today, Ellison (and family + related parties) will beneficially own 65.4% of the outstanding shares; putting their one day paper gain at $1.38 BILLION.
'Tis the season and that means giving as well as getting; and so I'm sure Marc Benioff, a former Oracle acolyte, would like to say thanks today, too. You see, the lofty valuation afforded NetSuite today had a halo effect on shares of salesforce.com (CRM); as investors no doubt looked upon the relative size, profitability and cash flow generation of CRM and bid the shares up in sympathy. CRM finished the day at $65 (up 8%) at a new 52-week high.
As a shareholder of both CRM and ORCL, I too will raise a glass of eggnog tonight for the early holiday tidings.
Note: This is not a
recommendation to buy or sell CRM, N, ORCL or any other
security, but is
personal analysis to foster discussion for informational purposes only.
At the time of this writing, I and/or funds I maintain discretionary
control over, did not maintain a position (long or short) in N but did maintain long equity positions in both CRM and ORCL.
As always, we reserve the right to alter our investment holdings at any time in the future. We also may, at
times, carry derivative options on underlying
positions as a hedge.
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