Why Eloqua Shares Skyrocketed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of software-as-a-service cloud-computing company Eloqua (UNKNOWN: ELOQ.DL  )  soared as much as 33% after it agreed to be acquired by Oracle (NYSE: ORCL  ) for $811 million, or $23.50 per share.

So what: According to Oracle, today's purchase of Eloqua will allow it to expand its cloud-computing capabilities and move into an area of growth that's rapidly expanding: the automation of administrative tasks. Eloqua recently released a new series of SaaS products over the summer, and shares have doubled since they debuted on the Nasdaq just five months ago.

Now what: It will be a few quarters before we find out if this deal is a positive for Oracle, but Eloqua shareholders have to be jumping up and down with excitement considering their company wasn't expected to turn an annual profit until at least 2014. To put this in another light, Oracle paid about 6,750 times 12-month trailing EBITDA for a company that merely rolled out a few new cloud-computing products. I congratulate Eloqua shareholders, but I don't see any immediate benefit to Oracle from today's deal.

Craving more input? Start by adding Eloqua to your free and personalized Watchlist so you can keep up on the latest news with the company.

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  • Report this Comment On December 20, 2012, at 4:15 PM, stocksandbombs wrote:

    I don't think you appreciate the importance of Eloqua to marketers. Further, as data becomes more and more key to marketing, offering products to marketers is a great fit for Oracle. Think Adobe + Omniture. I'm bummed, because I'd planned to hold my Eloqua shares for a LONG time and do way better than the gain I made. In fact, I'm surprised MF did not recommend Eloqua in their Advisor letter.

  • Report this Comment On December 20, 2012, at 4:56 PM, constructive wrote:

    I'm pretty sure Oracle bases their acquisition strategy on my red thumbs.

    Next up, take out Netsuite for $6B plus. If that happens I don't see any other choice except shorting ORCL.

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