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Speaker 1: Global business news twenty four hours a day. If Bloomberg

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Peal mixed picture for US equities the SMP

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Speaker 1: recovering an afternoon trading. Let's head right over to the

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Speaker 1: First Word breaking news desk for today's afternoon call. Here

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Speaker 1: he is Bill Mulaney. Good afternoon, Charlie. MANUS averages are

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Speaker 1: well off their morning lows, with the Dow currently down

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Speaker 1: eighteen points. SUPs are hired by three and NAZAC games

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Speaker 1: twelve at one point that was down a hundred and

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Speaker 1: three points. The small cap six hundred is lower by

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Speaker 1: two points. In the US ten yield at one point

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Speaker 1: five one per cent, eight out of tennis to be

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Speaker 1: sectors are higher, led by gains in consumer staples, utilities,

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Speaker 1: and technology. Only energy and telecom fell down. Transports are

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Speaker 1: little change, and as a bio Texas Game nine, utilities

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Speaker 1: rise to and the VIX is down by two percent.

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Speaker 1: Dow leaders to the upside included Home Depot, Apple, and Travelers,

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Speaker 1: while Boeing and Caterpillar led to the downside. Whole Foods

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Speaker 1: sank ten percent after earnings, while group On stored as

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Speaker 1: much as thirty five percent after its results. And finally,

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Speaker 1: some of the bigger names set to report tonight after

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Speaker 1: the bell include Expedia, Amazon, Alphabet, and When Resorts Live

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Speaker 1: on the first breaking news dask on Bill Maloney, Charlie,

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Speaker 1: all right, thank you very much, Bill Maloney, and to

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Speaker 1: hear live breaking news over your Bloomberg type squawk squ

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Speaker 1: A dot Net. I'm Charlie Pellett and that's a Bloomberg

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Speaker 1: business flash. You're listening to taking stock with pim Fox

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Speaker 1: and kapolee knews on Bloomberg Radio. The race is on

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Speaker 1: an Oracle took a big step today buying net Suite

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Speaker 1: in a deal valued at about nine point three billion dollars.

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Speaker 1: Netsuites products include customer relationship management software that will help

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Speaker 1: Oracle compete against the likes of Salesforce, dot Com and Microsoft.

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Speaker 1: Joining us now is on rog Rana. He's senior analyst

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Speaker 1: of software and I t services for Bloomberg Intelligence on Rock. Welcome.

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Speaker 1: Thank you. Now we know Oracle has been heading in

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Speaker 1: this direction as you were just telling me. Uh. In fact,

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Speaker 1: Larry Allison was a h investor in net Suite along

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Speaker 1: the way, so not exactly a surprise. How important is

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Speaker 1: this for Oracle? It's fairly important for Oracle to be

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Speaker 1: much more aggressive in the cloud applications space. Um, they

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Speaker 1: have been behind salesforce, they have been behind work day

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Speaker 1: when it comes to applications that are sold through the cloud. Now,

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Speaker 1: the history is both SAP and Article has dominated this

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Speaker 1: place for the last twenty plus years selling on premise applications.

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Speaker 1: Now with this new way of selling applications through the cloud.

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Speaker 1: You know, the three largest companies have been sales course

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Speaker 1: worked in net suite and you know a few smaller

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Speaker 1: ones and the growth is all in the cloud area.

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Speaker 1: So as Article is trying to move their product portfolio

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Speaker 1: from on premise to the cloud, you know this kind

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Speaker 1: of fits into their uh, you know, grow organically as

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Speaker 1: well as through acquisition strategy. On a rug, just to

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Speaker 1: describe CRM customer relationship management, we're talking about being able

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Speaker 1: to manage a salesforce and their interaction with current clients

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Speaker 1: but also potential clients. Doesn't really matter whether it's in

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Speaker 1: the cloud or wherever it is, just has to work.

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Speaker 1: Net suite do they bring small and mid size businesses

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Speaker 1: to Oracle in a way that is almost you know,

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Speaker 1: one of the reasons why you want to buy that sweet,

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Speaker 1: so that a couple of things first. In the CRM space,

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Speaker 1: you know, the big goodll Obviously Salesforce, dot Com, um

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Speaker 1: next wee does not do that. The net Sweet is

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Speaker 1: in the e r P space, which is your financial accounting,

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Speaker 1: financial management and things like that, and only for the

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Speaker 1: small to midside, mostly for the small to midsize customers.

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Speaker 1: As you said, UM, so far we really don't have

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Speaker 1: a bohemoth like Salesforce for CRM or work Day for

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Speaker 1: HR applications um in in the e r P space,

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Speaker 1: most of those are on premise applications that were deployed

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Speaker 1: by s a P. Now Article has a product which

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Speaker 1: is a cloud based the RP system. But what I

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Speaker 1: think will happen with this this place is you have

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Speaker 1: the next SWEET product. You have the financial and the

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Speaker 1: sales and marketing arm of of Article, which now you

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Speaker 1: can go and start selling this product to the to

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Speaker 1: the large enterprises. How much does this mean for Oracle's

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Speaker 1: bottom line? See again, it's it's more of a strategic

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Speaker 1: move because again it's not going to add that much

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Speaker 1: to the you know, earnings or to the to the

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Speaker 1: top line. But really what you're going to see is,

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Speaker 1: you know, you know, a few years later when most

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Speaker 1: of the applications that people are using would be cloud based.

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Speaker 1: Article wants to be a part fit at that point.

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Speaker 1: You don't want to be left behind, which is partially

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Speaker 1: the reason why you see a lot of cloud acquisitions

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Speaker 1: in the space. SAP has been acquiring a lot of

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Speaker 1: entities for the past few years. Article actually has been

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Speaker 1: a lot a little you know, quieter on on the

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Speaker 1: acquisition front compared to these some of the other companies. Well,

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Speaker 1: I'm just looking at the performance of the stock of

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Speaker 1: Oracle today. Investors must like the deal because the shares

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Speaker 1: are higher by about three quarters of a percent. Shares

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Speaker 1: of net Suite are higher by more than eighteen percent.

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Speaker 1: Any chance that anybody else is going to come in

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Speaker 1: and make a competing bid for net Suite. I mean,

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Speaker 1: I'm leading you on because I want you to tell

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Speaker 1: me who's the biggest shareholder of net suite. It's lady

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Speaker 1: is one of the biggest area, one of the biggest shareholders.

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Speaker 1: But the thing is, I think that the valuation for

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Speaker 1: this particular deal, let close to eleven plus times revenue,

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Speaker 1: is one of the more expensive ones on the market.

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Speaker 1: So it's not as if you know, he's he's getting

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Speaker 1: a bargain over here, uh um, you know, in this deal.

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Speaker 1: So I know it will be very tough for somebody

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Speaker 1: else to come in and you know, either top the

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Speaker 1: price or try to get it with so much of

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Speaker 1: you know, voting power that Larry has. Is there a

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Speaker 1: risk of a disruptor of a whole other approach to this,

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Speaker 1: this kind of uh task inside a company that you know,

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Speaker 1: or a call the spends way to keep up, but

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Speaker 1: someone else it's going to leap frog ahead. It's going

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Speaker 1: to be tough only because you have a lot of

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Speaker 1: customer relationships and your systems are already ingrained to what

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Speaker 1: you do, whether it's supply chain, whether you're serial accounting,

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Speaker 1: I mean you're that's the lifeline of a particular business,

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Speaker 1: so it's not just easy to uproot it. And which

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Speaker 1: is partly the reason why the on premise business is

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Speaker 1: still relatively stable for a SAP is because it's just

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Speaker 1: not easy to rip it about. I want to thank

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Speaker 1: you very much for coming and sharing all this information

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Speaker 1: with us. On A. Rag Arana is a senior analyst

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Speaker 1: of software and I T services for Bloomberg Intelligence, providing

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Speaker 1: real time and unique research as well as context and

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Speaker 1: a variety of industries as well as markets and government

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Speaker 1: factors that affect business operations are terminal. Customers can access

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Speaker 1: this function at b I go on or speaking about

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Speaker 1: Oracles nine point three billion dollar purchase of net Suite,

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Speaker 1: shares of net Suite higher right now by more than

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Speaker 1: eighteen shares of Oracle up by three quarters of represent

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Speaker 1: and the shares of Salesforce dot Com up more than

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Speaker 1: one percent. This is taking stock. I'm pim Fox, my

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Speaker 1: co host Kathleen Hayes, and this is Bloomberg. Where does

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Speaker 1: Hillary Clinton go? And next We're going to be speaking

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Speaker 1: with Irene Finnel Hanegman from Columbia University about Clinton's platform

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Speaker 1: and what it means for the economy.