Did Oracle Buy the Right Cloud-Computing Specialist?

Software giant Oracle (Nasdaq: ORCL  ) already rides the cloud computing wave in a big way. If you're not using Oracle Fusion and other direct cloud plays, your company's cloud strategy probably includes some Oracle databases or at least Oracle-owned Sun server hardware. One way or another, Larry Ellison probably has a finger in the IT clouds around you.

So how do you follow an already massive cloud commitment like that? Let's try some cloud-based customer service.

Today, Oracle announced a $1.5 billion acquisition in that space. The database veteran will soon be the proud owner of RightNow Technologies (Nasdaq: RNOW  ) if shareholder votes and regulatory approvals go Oracle's way.

"RightNow's leading customer service cloud is a very important addition to Oracle's Public Cloud," says Thomas Kurian, Oracle VP of development, in a prepared statement. It'll certainly help Oracle keep up with the Joneses; both TIBCO Software (Nasdaq: TIBX  ) and salesforce.com (NYSE: CRM  ) have married their business intelligence tools to powerful social networking tools already, and RightNow is a big step in the same direction.

The big question now is, what happens to highly respected RightNow rival LivePerson (Nasdaq: LPSN  ) ?

Shares of the Rule Breakers recommendation have gained 7.2% today as of this writing, and keep climbing skyward. Oracle's big buy with a 25% buyout premium kindles hopes of a similar deal for LivePerson. The line of acquisition-hungry tech giants with an interest in cloud computing is long and includes both Hewlett-Packard (NYSE: HPQ  ) and IBM (NYSE: IBM  ) . At the very least, Ellison just validated the value of instant online customer support. Just the extra publicity tied to this deal might be worth a few LivePerson contracts.

In fact, Oracle's deal is surprising because it passed over LivePerson to land at RightNow. Let me point out that one of these stocks carries a perfect five-star rating in our CAPS system while the other sports just one star out of five. The five-star stock boasts twice the operating margin of the single-star competitor, and its PEG ratio indicates deep value at half the other guy's size. LivePerson is the five-star stock that wins every one of these direct comparisons.

Did Ellison pick the right customer service specialist? Only time will tell; add Oracle to your Foolish watchlist to keep tabs on how it all works out.

In the meantime, you can learn more about the industry-changing cloud computing trend and how to invest in it all. This free video report will get you started down a very profitable road.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Motley Fool owns shares of IBM and Oracle. Motley Fool newsletter services have recommended buying shares of salesforce.com, LivePerson, and TIBCO Software; a separate newsletter service has recommended shorting salesforce.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can go over Anders' holdings and a concise bio, follow him on Twitter or Google+, or check out our Foolish disclosure policy.


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