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Oracle, Loudcloud Join Forces

Managed services provider Loudcloud Inc., a company co-founded by Netscape heavyweight Marc Andreessen, struck a strategic alliance with Oracle Corp. Wednesday.

Together, the two companies will offer Global 2000 companies and software companies services spanning e-Business strategy and planning to Internet infrastructure operations and management. The companies said their integrated services will help businesses develop, deploy, manage and integrate customers' Internet operations with the rest of their mission critical enterprise applications.

"Loudcloud has quickly become a major player as an outsourced Internet infrastructure services provider," said Mark Salser, senior vice president at Oracle. "Our relationship with Loudcloud will enable us to meet the needs of our shared customers and partners more effectively with a solution that addresses client needs from application development to infrastructure operations and management."

Tim Howes, president of product operations for Loudcloud, added, "Loudcloud is focused on helping Global 2000 corporations and online software businesses succeed on the Internet. One of the most important success factors is the ability to fully integrate a customer's enterprise applications with their Internet operational environment. We are thrilled that Loudcloud will be able to offer Oracle Consulting's world-class expertise in developing and implementing e-business solutions that link Loudcloud's infrastructure with Oracle's industry-leading applications."

The deal could be a big win for Loudcloud, which currently is planning to go ahead with a $150 million IPO under the ticker "LDCL" despite books that make it look more like the big-spending Internet companies of 1998 than the more sober, thrifty companies of today's market. The company reported sales of $1.9 million for the first six months of the year on losses of $49 million -- though nearly $25 million of the loss can be laid at the feet of amortized stock-based compensation expenses. But by the end of October, Loudcloud signed new customer service agreements of at least $76 million. And Wednesday's deal with Oracle, the world's second-largest software company -- which last week reported second quarter earnings that beat analysts estimates (unlike rival Microsoft which lowered expectations) -- can only help.

The deal, together with Andreessen's name and backing by venture capitalists like Goldman Sachs and Benchmark Capital could indicate a sunny outlook for the initial offering. Loudcloud is looking for an opening price in the $10 to $12 range.

But Larry Buchsbaum, director of e-Sourcing Strategies at The Yankee Group, said the announcement of the deal in itself is not enough to bank on.

"In general, it all depends on how much push through there is from Oracle to Loudcloud," he said. "In the short-term it's not going to help them in terms of the IPO, but I think long-term it depends on how much actual traction there is as a result of the alliance."