Tuesday, April 18, 2006

Hit #89

Portal Software (PRSF), the billing software maker, was acquired by Oracle last week, for $220 million in cash.

The offer values Portal at $4.9/share, a discount of 67% to my average cost of around $15/share. Luckily, as I mentioned here, I had closed out my substantial position in Portal while I still had some gains. The gains from the earlier sales more than offset this loss from the few shares that I held onto hoping for a turnaround.

As I also detailed in that earlier post, it will be hard to find another company that has done so badly for shareholders. The executives though cashed out with perfect timing, with a handful selling more than a billion dollars worth of stock before the tech bust.

Oracle has again done a great deal. By moving up into applications, Oracle is positioning itself for some superb growth down the road. Like I said in this post, I still recommend Oracle as a great buy and hold right now. There will be a few positive earnings surprises - you can wait till upgrades that usually come too late, or you can buy now!

In the billing sector itself, I see a few more takeovers. The targets listed here, Amdocs, Convergys, CSG Systems, Boston Communications, aren't cheap anymore.

Boston Communications (BCGI), while it still has a few legal issues to deal with, may be a good speculative bet. Its recent partnership with Convergys could end up as something more. Oracle itself is unlikely to settle for just Portal software, and may go after Amdocs (DOX) as well.

Previous hit - Lucent (#88)


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