Oracle Continues Push Into Cloud Computing With RightNow Deal

Oracle Corp. said it is buying customer-service software maker RightNow Technologies Inc. for $1.43 billion in cash, continuing a recent push into the fast-growing field of cloud computing.

The deal marks the first time Oracle has bought a company that sells application programs accessed primarily over the Internet, a segment known as software as a service. The acquisition comes shortly after Oracle introduced several internally developed applications that are accessed in the "cloud," a catchall term for online data and programs.

Oracle made online software a centerpiece in its user conference earlier this month. The Redwood Shores, Calif., company said it would launch its own "cloud" where businesses could store data and access programs. It also said that many of its own software programs would be available on its "cloud."

RightNow is another arrow in Oracle's online quiver. The Bozeman, Mont., company's software is used by call centers and help desks to help improve customer service. It reported revenue of $186 million in the fiscal year ended in December, up from $153 million a year earlier.

Cigna is buying HealthSpring, Oracle will acquire RightNow and Mattel will acquire HIT Entertainment. WSJ's Deal Journal Writer Shira Ovide reports in this Markets Hub "Merger Monday" edition.

In a press release and online presentation, Oracle said it planned to add RightNow's software to its own portfolio of online offerings, which include programs for managing sales and marketing and human resources. An Oracle spokeswoman declined to comment beyond the materials.

Oracle is purchasing RightNow as the market for online software has swelled, outstripping the growth in traditional software. Sales of online software, which was $10 billion in 2010, is expected to more than double to $21.3 billion in 2015, research firm Gartner said. Traditional software, which businesses install on equipment they own, is much larger—$104 billion in 2010, according to Gartner, but growing much slower.

"It's a sign of future acquisitions" for Oracle, said Ray Wang, an analyst at Constellation Research. He said Oracle may snap up more companies in the fragmented online software market, which currently doesn't have a large company that sells a wide variety of programs.

In another sign of growth for the online software segment, Workday Inc., which makes online human resources software, said Monday that it raised an additional $85 million in venture-capital funding.

Recently, Oracle has acquired several companies that make technology that could be used to enhance other online software offerings. Last week, Oracle said it was buying Endeca Technologies Inc., which makes tools that help businesses analyze data, for an undisclosed amount.

Oracle offered $43 a share for RightNow and said the deal, expected to close by early next year, is valued at about $1.5 billion net of RightNow's cash and debt.

Monday, Oracle shares were up 75 cents, or 2.3%, to $32.87 in 4 p.m. trading on the Nasdaq. RightNow shares were up $6.98, or 19%, to $42.94.

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