Oracle Buys Eloqua: Expanding Marketing Footprint

Eloqua's Fit in the Oracle Application Portolio

Eloqua is being brought in as the 'centerpiece of the marketing cloud' solution within the broader Customer Experience Cloud offering.  The Customer Experience Cloud is Oracle's comprehensive go-to-market strategy for its CRM offerings that it introduced in mid-2012.  Additionally, Eloqua will be leveraged with integrations to Fusion CRM and ultimately extended into vertical offerings.  There is overlap with the previously acquired Market2Lead product in terms of campaign capabilities but Oracle spokesmen stated that Eloqua would be the primary product and Market2Lead would be integrated to it.

Market Reaction

First and foremost, Oracle is serious about its CRM business.   According to IDC market numbers, Oracle has led the worldwide CRM applications market since its purchase of Siebel, holding 11% of the market in the 2011 shares data.  However, both SAP and Salesforce.com are within two percentage points of that share fueling Oracle's motivation to maintain and increase the distance.  The current battle ground of competition within the CRM applications market is being fought in the marketing automation segment where, as this IDC Data Map shows, the traditional transactional vendors hold much smaller footprints.  

This acquisition immediately brings to mind the question, 'what will Salesforce.com do now?'  Not only was and is Eloqua a key partner of Salesforce's, the company relied on it and similar partners to provide this capability to its customer base.  Salesforce.com's acquisitions in the marketing arena to date have been focused on social marketing capabilities.  While Oracle was explicit in stating that the product, like the other components of its various applications offerings, is capable of being used in a heterogeneous environment, Salesforce.com won't be happy long sharing its customer base  Eloqua today, has a significant number of Salesforce.com customers in its base as well as Microsoft Dynamics CRM.  Marketo may become far more attractive to Salesforce.com as the new year begins.

Conclusion

Overall, the latest acquisition by Oracle signals a commitment to building a fully comprehensive product offering for its CRM business that covers all the major elements of the CRM applications market.  For Oracle the coming year will be one of bringing integrations and proof points to market.  For the other marketing automation vendors with broad marketing capabilities, specifically Adobe, IBM and SAS, there will be more of a trade-off for customer evaluating products between a CRM suite solution and best-of-breed. 

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Quick Take: Morning Look

Markets are roughly flat in early trading.  Yesterday the markets really tailed off at the end of the day and ended on a weak note.  It's interesting that there is usually at least one big down day during the week of options expiration, so maybe yesterday was that day.

I'm a little surprised the market didn't bounce more on some of the positive economic data we got.  That could indicate some more weakness later in the day.  And as we get closer to Friday volume levels should tail off as people leave to take a long holiday weekend.  The market is open for a half day on Monday, but lots of folks will simply take off and get in a 4-5 day weekend.

The final estimate of Q3 GDP came in much higher than expected at 3.1%.  That's pretty solid growth, but of course its a rear view mirror datapoint, and at this point we are really concerned with how 2013 GDP will come in.   Current estimates are for growth of 1.5% - 2.0% depending on how fiscal cliff talks effect spending and taxes.

The Philly Fed survey ticked up to +8.1 for December from a low -10.7 reading last month.  And existing home sales rose to 5.04 million units from 4.76 million the previous month.

Asian markets were mixed overnight, after the Bank of Japan upped its asset purchase program by another 10 trillion Yen.  European markets are also mixed this morning.

The dollar is higher and metals are getting hit hard.  Gold prices are lower by $27 to $1640.  Copper prices are down -2% on the day and silver prices are off by more than 4%.  Lots of selling pressure.

The 10-year yield is hovering near 1.79%.  And the VIX is flat at 17.40.

Trading comment: With more individual stocks showing positive action, its hard to want to fight the tape here.  I am no more confident that a grand bargain is reached regarding the fiscal cliff.  Most congressmen are getting ready to go home for the holiday.  So they will have less than a week to get something done when they get back.  That should make for interesting action in the market.  And I still wouldn't rule out a brief pop on any hastily crafted agreement combined with some can kicking provision to push things into 2013.  But as we enter 2013 we have been moving our asset allocations toward a more conservative posture.

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Climbing The Wall of Worry

I'm getting a late start today as I had to take the kids to school this morning, which cuts into market hours when you're on west coast time.  Unfortunately I am on drop-off duty for the rest of the week as well.  So my morning comments are likely to be truncated for the remainder of the week.

Stocks added to their weekly gains yesterday with a nice rally that came on rising volume.  No real progress has been made on the fiscal cliff talks, but the market continues to climb the proverbial wally of worry.  I remain concerned that we could either get a 'sell the news' reaction to some hastily crafted deal, or a sharper sell off if no deal is reached. 

The volatility index is popping 6% this morning to 16.52, so there are some traders who are expecting an increase in volatility in the market near-term. 

Two recent earnings reports from FedEx and Oracle (ORCL) are both being greeted with enthusiasm this morning as the stocks gapped higher.  Both beat earnings and revenue estimates, but in the case of FDX the company lowered next quarter's forecast.

Gold prices continue to pullback, and are now close to the 200-day moving average.  In this environment of printing money gold should continue to do well longer-term, but it doesn't go up in a straight line and these sort of pullbacks serve to shake out the weak holders.

Asian markets rose overnight led by a +2.4% spike in Japan.  China was flat.  And European markets are higher following an upbeat German business climate index reading.  Additionally, industrial production data in Spain and Italy both surpassed expectations.  The euro is higher again today.

The 10-year yield is pulling back from yesterday's spike, and sitting near the 1.80% level.

More stocks are starting to breakout, which adds to the notion of the market strengthening and continuing to climb the wall of worry.  But in this environment risk management remains important.

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Talks Stall, But Stocks Still Looking For 'Cliff' Agreement

Stocks rallied nicely yesterday, and so far today have been adding to those gains.  It seems a bit odd that Congressmen keep coming on TV to say that they are still a ways apart on the fiscal cliff stuff but the market continues to rally as if an agreement is imminent.

I think there are two things to keep in mind.  One is the potential for a 'buy the rumor, sell the news' type of event where the market rallies in anticipation but if a deal gets announced the market sells off.  The other is that not all agreements are created equal.  And if one is hastily reached that doesn't bode well for the economy longer-term, than any enthusiasm over a deal could be short-lived once reality sets in.  So careful what you wish for.

In economic news, the NAHB Housing Market Index for December rose to 47 from the prior month's reading of 45.

Shares of AAPL tried to bottom yesterday and are up again today.  A judge has rejected its injunction bid vs. Samsung, and Samsung will drop its lawsuits against AAPL in Europe.  Barron's also had a positive article on AAPL today.

Overnight Asian markets were mostly higher, led by a 1.0% pop in Japan to an 8-month high.  The Reserve Bank of India opted to hold its key interest rate steady at 8.00%.  In China, the govt. reportedly stated its GDP target for 2013 will be 7.5%.

The dollar is lower today, but commodities are mixed.  Gold prices are slightly weaker down to $1693.  Oil prices are higher near $87.88.  Silver and copper prices are weaker as well. 

The 10-year yield is rallying on fears about no fiscal cliff deal.  The yield reached 1.80% this morning, which is the highest level since late October.

As for the volatility index, it had a delayed reaction yesterday and really didn't start to decline until late in the day.  But today the VIX is dropping by a lot, down 5% so far near the 15.50 level. 

Trading comment:  I have said recently that we didn't want to fight the tape as it was likely the market would work its way higher as investors anticipated a deal on the fiscal cliff and as portfolio managers looked to put money to work to try to add some performance before year-end.  But big picture we have still been getting more conservative in our asset allocations as we feel that there is still some downside risk as we enter 2013.

KAM Advisors has long positions in AAPL

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Monday Morning Musings

The market is higher in early trading after the 2-day pullback seen at the end of last week.  I prefer a market that opens weak and ends strong, so let's see if the early gains can hold until the end of today's trading session.

The fiscal cliff talks continue.  House Speaker Boehner offered a tax hike for top earners (over $1M) if new revenue was met with spending cuts.  But the White House rejected  the offer, so even though discussions continue I'm not sure how much headway is being made.

In M&A news, Caribou Coffee (CBOU) is being acquired by a private equity firm for a 30% premium to Friday's close.

In economic news, the Empire Manuf. survey for December came in at -8.1, which is down from last month's reading of -5.2 and well below estimates.  It is not clear if the figure has been effected by Superstorm Sandy.

Overnight Asian markets were mixed.  China bounced +0.5% despite the new leadership there saying they may be more tolerant of slower growth.  This comes as the country is set to see its lowest growth rates since 1999.  The problem is that China needs the fast rates of growth to create millions of jobs required for all of the citizens moving to the cities from rural areas.

In Europe markets are generally lower this morning.  Germany's Bundesbank said the country's economy will suffer a notable contraction in Q4 and reiterated it sees the German economy growing at just 0.4% in 2013.

Apple (AAPL) is lower again this morning as it tests the $500 level.  Sometimes a stock needs a notable downgrade to bottom, and today it might have received it from Citigroup.  The analyst downgraded the stock to Neutral from Buy, but this downgrade comes just weeks after Citi initiated coverage of the stock with a Buy.  AAPL remains up +25% for the year. 

Commodities are mixed.  Gold prices are up fractionally to $1700.  Oil prices are higher near $87.50.  But silver and copper prices are lower.

The 10-year yield has held above its 50-day and is higher today to 1.72%.  It's nice to see that the 10-year yield is well above its July lows as folks start to question economic growth in 2013.

Trading comment: The market should be able to bounce here.  The S&P 500 just retested its 50-day average support, which is a logical technical level from which to bounce.  As of this post, AAPL is trying to bottom and rebound on the day.  If AAPL goes positive that would add fuel to the bulls' fire.  GOOG isn't being talked about at all, but its price action has been very solid. Today it is up another $13 to $715.  Not bad at all. 

KAM Advisors has long positions in AAPL and GOOG

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Looking For A Pause In The Action

The markets are mixed in early trading after yesterday's rally faded.  The Fed came thru with their version of QE4 as many had expected.  The markets, which were already up on the day, extended their rally a bit but as we headed into the close sellers emerged and stocks began to fade.  By the close the market had given up almost all of its gains.  This increases the likelihood that after a multi-day advance the market is due for a little breather.

In corp news, Best Buy (BBY) is bouncing again on news that founder Richard Shultz is expected to submit a bid to take the company private.  This rumor has been swirling for months, but this time around the CFO also just bought 100,000 shares.

CVS is also trading higher after raising its dividend as well as full-year guidance.  CIEN is also a bit higher despite missing earnings and issuing cautious Q1 guidance.

In economic news, November retail sales rose +0.3% vs. last month's -0.3% reading.  But excluding autos retail sales were unchanged.

Asian markets were mixed overnight.  China was -1.0% lower after an analyst at Commercial Bank of China suggested additional stimulus was unlikely due to rising property price concerns.

European markets are mostly lower after Eurozone ministers approved the next tranche of Greek aid for 49 billion euros through March 2013.  I'm sure in March we will be hearing about the "next" tranche of aid that needs to be approved.  What happens when Spain comes to the trough?

Commodities are mostly lower despite weakness in the dollar index again.  I would have thought more QE would be bullish for gold, but the yellow metal is lower today back below the $1700 level.  Silver and copper prices are also lower.  Oil prices are roughly flat near $86.76.

The 10-year yield is higher again up to 1.72%.  And the volatility index is flat near the 16 level.

Trading comment: Yesterday's downside reversal in the market usually portends further weakness in the near term as it represents some exhaustion among buyers.  I would look for a further pullback in the indexes, but the S&P 500 could find support at its 50-day average, which now sits near the 1415 level.  AAPL remains stuck in this trading range between 520-550, but GOOG is breaking above its 50-day average and could find some running room.

KAM Advisors has long positions in AAPL and GOOG

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More QE On The Way?

Markets are mixed in early trading in subdued volume ahead of today's FOMC announcement and Bernanke press conference.  The Fed's "Operation Twist" is set to expire so many expect a new program of bond buying to be announced today.  It is debatable if the market has been running more on expectations of more quantitative easing (QE) or hopes of a fiscal cliff agreement.

Folks should be careful about wishing for a hastily reached fiscal cliff agreement.  Although the markets might breath an initial sigh of relief, if the terms of the deal aren't favorable for economic growth I think it could make 2013 more problematic for the markets.

In corporate news, Wal-Mart (WMT) made cautious comments about the company's holiday sales.  Costco (COST) is higher after reporting solid earnings.  And Joy Global (JOY) is also higher after solid results but cautious guidance.

Asian markets were mostly higher overnight despite N. Korea launching a rocket over the Japanese island of Okinawa.  Japan resisted the urge to shoot down the rocket.  China was 0.4% higher after Nomura sees GDP growing 8.2% in 2013.

Europe's markets are also mostly higher ahead of our Fed meeting.  Greece's debt buyback was a partial success but the country was unable to reduce its debt by the full target amount.

The dollar index is lower which is helping commodities.  Oil prices are up to $86.35 and gold prices are higher near $1712. 

The 10-year yield is getting a boost to 1.67%.  And the volatility index is currently higher by 2.5% near the 16 level.

Trading comment: The SPX is currently higher for a 6th straight day.  Of course, the real action will start after the FOMC announcement.  It feels like more QE is already being priced in, and so any announcement of such wouldn't produce much of an upside surprise.  I also think the markets are expecting some positive news regarding a fiscal cliff agreement.  Since we are getting short-term overbought in the market, a pullback would not be surprising.  But the overall price action remains constructive and it is not out of the question that the markets have a shot a making a run at the September highs. 

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