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Predicting Oracle's Next Move

Oracle (Nasdaq: ORCL  ) Chairman Jeff Henley spoke at the JP Morgan investors' conference yesterday. In his characteristically direct way, he announced that the $10 billion PeopleSoft acquisition has been fully integrated.

So the natural question is, what's next for the software giant? Could there be a dividend in the company's future? Well, Oracle thinks dividends are for wussies. Instead, it's using its resources to gear up for another big acquisition.

Henley named no targets -- but that didn't stop investors from speculating. Perhaps the most popular name being tossed around is Siebel (Nasdaq: SEBL  ) , a leader in customer-relationship-management (CRM) applications that even Carl Icahn has been rumored to be interested in buying.

Siebel serves a market that exceeds more than $7 billion per year, and the company has $2.2 billion in the bank and top-notch customers who pay hefty ongoing maintenance fees. But the company is also in turmoil. It recently sacked its CEO because of a poor first quarter. And switching a system as large as Siebel's would be disruptive for an organization and would carry relatively large costs.

To make matters worse, Siebel faces serious competitive threats, especially from (NYSE: CRM  ) and other emergent CRM companies. No doubt, has built an easy-to-use and powerful product that's getting an amazing about of buzz. And does not have to deal with the restructuring distractions that face Siebel.

Oracle may be better off buying a company that provides business-intelligence solutions, which mine and analyze myriad data sources to find weaknesses and make forecasts and budgets. After all, companies that have Oracle's enterprise-resource-planning (ERP) software would likely want to be better able to analyze their data, and a business-intelligence solution suited to Oracle systems would find a ready customer base.

One of the leaders in the business-intelligence space is Cognos (Nasdaq: COGN  ) , which had a strong first quarter while many other enterprise-software players were weak. But despite the traction, Cognos' stock price has been weighted down by generally negative sentiment toward the sector.

True, it's never a good idea to buy a company based on buyout speculation, and that makes Siebel an unattractive candidate. It's still all about buying good companies. And as I indicated in my last piece on the company, Cognos is definitely a standout. Let's see whether Oracle agrees.

Fool contributor Tom Taulli does not own shares mentioned in this article.

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