Oracle’s $5.3bn deal for hospitality vendor Micros Systems is "a major bet" despite the tech giant being well known in the retail space, according to one analyst.
Quocirca’s Clive Longbottom warned that Oracle must try not to destroy the reputation of the hospitality and retail systems vendor, but added that its expertise in lifecycle management could bolster Micros’ offerings.
Oracle sealed its acquisition yesterday as it attempts to kickstart growth following a 4% drop in profit to $3.6bn in its fourth quarter, announced this month.
The acquisition gives Oracle access to customers including Burger King and Ben & Jerry’s, with Micros’ income derived from selling cash registers and retail software to restaurants and shops as well as management software to hotels.
Longbottom told CBR: "Micros is a speciality company in an area where Oracle wants to play, as it sees hospitality as a core hub area. If Oracle can gain the end point, it believes that it can leverage that through to the back end, and also work to tie in the whole customer/guest experience from point of contact through to lifecycle management.
"It’s a bit of a major bet, though – although Oracle is well known in the retail space and did well with the Retek acquisition [for $630m in 2005]. Hospitality has some common processes with retail – but also some major differences.
"Oracle will need to come out from its database centre and really work on Micros’ domain expertise to ensure that it does not destroy Micros’ hard earned reputation in the space."
Wedbush investment firm analyst Gil Luria told Forbes the deal was "a sensible move" while analysts from American investment bank Stifel called it "a modest positive" in a note.
However, they added: "That said, we ultimately believe that Oracle would be better off using $5bn of cash to buy more pure SaaS assets."
The acquisition of Retek sparked a bidding war between rivals Oracle and SAP that Oracle edged nine years ago, and some observers have speculated that the Micros move will fill gaps in Oracle’s retail solution.
The firm’s website says 5,000 retailers across 68 countries use its products, which cover bases such as web commerce, merchandise operations management, supply chain planning, marketing, business intelligence and human capital management.
The Micros acquisition marks the biggest deal of Oracle’s since its purchase of Sun Microsystems for $7.4bn in 2010.