2008 was still a buyer's market

By David Rubinstein

January 2, 2009 —

On Dec. 1, the U.S. government proclaimed what many of us already believed … that the economy here is in recession, and has been since December 2007. And in many nations around the world, things aren't looking too rosy either.

Yet again, the technology sector seems to have been among the last industries to feel any pain, as evidenced by the number and size of mergers and acquisitions in 2008.

The year started off with a bang, as the on-again, off-again courtship of BEA Systems by Oracle was finally consummated to the tune of US$8.5 billion. That came out to about $19 per share. An earlier offer in 2007 of $17 per share was rebuffed by BEA, even though it was trading at only an average of about $13.50 per share. BEA had been recognized as a leader in tying business process management into a service-oriented architecture. Speculation was rampant that Oracle bought BEA more for its customer list than its technology, but a July product-integration road map was declared completed at September's OracleWorld, with few significant end-of-life announcements.

Also in January, Sun proved it meant what it said about its embrace of open source, shelling out $1 billion for database provider MySQL AB. A key piece of the Linux-Apache-MySQL-Perl/PHP/Python stack, MySQL is the database behind many Web 2.0 sites, such as Facebook and some Google applications. It also gives NetBeans developers a database that's more closely tied to the framework, though Sun said it still will support Oracle and PostgreSQL.

Among the biggest deals of the year was Hewlett-Packard's purchase of EDS, vaulting HP into the IT services market and pulling it into closer competition with IBM. HP paid $13.9 billion for the consulting giant. IBM made about $54 billion in services in fiscal 2007; EDS made $22 billion, and HP made $16.6 billion.

The largest company that has flown under the radar is Progress Software, which made further progress along the acquisitions front. In 2008, Progress spent $162 million to acquire Iona Technologies, a SOA player. Iona went from being a darling during the dot-com era with its emphasis on CORBA, offering trade-show overseas trips with full access to concerts, to moving into the enterprise service bus space and finally focusing around its Artix and Orbix lines of data services, enterprise service buses and more. Progress also picked up integration testing tools provider Mindreef to further strengthen its SOA position. IBM, meanwhile, spent $333 million to acquire business rules management software provider Ilog to bolster its position in the BPM and SOA software markets.

As was the case with the economy as a whole, not all the news on the financial front was positive. Microsoft was hit with $1.3 billion in fines by the European Union, which decided Microsoft was charging "unreasonable prices" to developers for access to information on Windows client and server protocols. This, added to earlier fines, brought the total of EU penalties to nearly $2.3 billion. But Microsoft, which posted fiscal 2008 revenues of just more than $60 billion and has a market capitalization of more than $169 billion, was easily able to weather the blows. In fact, Microsoft in 2008 agreed to abide by the EU rulings, be more open to open source, and has taken other steps to be friendlier to customers and partners.

And through it all, the saga of SCO continues. The company, which declared Chapter 11 bankruptcy in late 2007, had a reorganization plan announced in March. That called for a $100 million infusion of cash from an investment firm to cover a court-ordered $37 million judgment payable to Novell as a result of failed litigation. But then that order was reduced to a bit more than $2 million, easing the strain somewhat. While revenue from its SCOsource area was zero, (since SCO lost its legal claim that its source code was included in the Linux code base, people apparently felt they didn't need to pay SCO to protect their Linux investments) SCO did create some mobile planning software that had a nice uptake. Along with its Mobile Server and SDK, the future of the company will be decided on the road.

Related Search Term(s): finances, SOA, BEA, EDS, Hewlett-Packard, IBM, Ilog, Iona, Microsoft, MySQL AB, Oracle, Progress, SCO, Sun

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