Ebay/Skype + Oracle/Siebel

it seems like news has gone into hyper drive the last week and now every time i turn around i’ve missed another major story. so apparently ebay just bought skype and oracle took out siebel. wow. two huge stories within two quiet days. seems like one is a giant consolidating its hold on the new world, the other a giant consolidating the old world. 

it’s always been my belief that companies revert to major acquisitions when their own numbers are falling short of expectations. it’s a pyramid scheme where the company can mask their bad numbers within the ‘pro forma’ combined. some lucky ceo’s even hand the baton over before the music stops. in the past i’ve used major acquisitions as a signal to short stocks. this worked amazingly well  with peregrine systems which seemed to announce a bigger acquistion every quarter until they were eventually caught cooking their books. 

now i’m not rushing out to short oracle or  ebay but another part of the rule is the less strategic and synergistic the acquisition the higher the liklihood that the management team is just selling their own stock while the price is high. of course aol was the best example of this gambit.  based on this rule, ebay would be the stock to short as i just cant see any strategic-ness to owning skype. 

2 thoughts on “Ebay/Skype + Oracle/Siebel

  1. I tend to agree with your statements regarding major acquisitions. It’s especially clear and obvious with companies that acquire higher margin based products from firms to float and drag their own products with tight margins.
    Not to be the master of agreement, but when it’s clearly strategic to make these types of acquisitions rather than just financially tactical it tends to make a lot of sense.

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