Wednesday, August 18, 2010

NetSuite To Purse Acquisitions in Analytics and Healthcare

NetSuite (NYSE: N), a San Mateo, California-based business management software company, could use acquisitions to expand its vertical offerings according to the CEO Zachary Nelson.

Asked by an analyst about uses for the company's USD 98.2 million in cash, Nelson replied by stating, "We look around in the marketplace around verticals." He added that the software as a service (SaaS) company is "pretty judicious" with its cash. Netsuite appears to be very well-positiond in th ERP sector ready to capitalize on gold rush to cloud computing.

Netsuite's focus is to extend its applications with vertical functionality and would be interested in targets that add a complementary solution or help it move up in the market. The company's professional services application was created through the acquisition of OpenAir for USD 26 million in 2008 and QuickArrow for USD 20 million in 2009.

Many anlysts think NetSuite could make acquisitions around analytics. There are number of analytics companies in the market bu Cloud9 Analytics is probably as good a candidate as anybody for NetSuite to acquire since it could help gain access to new verticals due to its focus on financial services, retail, pharmaceuticals and manufacturing. NetSuite could move into healthcare by developing a physician practice management application that help doctors interact with their patients to provide a more comprehensive, better managed care environment.

NetSuite could target government, manufacturing, healthcare, social media monitoring and analytics, employee rewards and recognition, and non-profits. According to the CEO Nelson, the company's main competitors are Microsoft and SAP it rarely sees competition from Oracle. NetSuite is a potential target for acquisition by Oracle as well as by SAP. According to SEC filings, Larry Ellison, CEO of Oracle, owns 50.5% of NetSuite through NetSuite Restricted Holdings and his children own a further 9% of the company.

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