Oracle Gets Serious

Oracle put to rest any doubts about its seriousness in acquiring PeopleSoft Wednesday when it upped its hostile takeover bid by more than 20%.

PeopleSoft rose 5% to $18 after Oracle increased its cash offer from $16 a share to $19.50. Also on Wednesday, the State of Connecticut entered the Oracle-PeopleSoft fray.

Perhaps more important than the question of whether Oracle was trying to disrupt PeopleSoft’s acquisition of JD Edwards is the question of what a cash takeover in the mid-cap software sector would mean.

As we said back in January, a wave of cash takeovers of small technology companies was suggesting that small techs had become undervalued.

Can the same now be said for mid-cap companies like PeopleSoft ? At 30 times earnings and free cash flow, PSFT isn’t nearly as cheap as the small caps we wrote about in January, but Oracle’s bold offer could serve to increase investor confidence in tech companies, particularly if other cash takeovers follow.

The broader market was mixed Wednesday on a warning from Eastman Kodak , but the Nasdaq finished higher on Oracle’s sweetened offer.

The Nasdaq rose 8 to 1677, the S&P 500 slipped 1 to 1010, and the Dow declined 29 to 9293. Volume rose to 1.47 billion shares on the NYSE, and 2.1 billion on the Nasdaq. Decliners led by 20-12 on the NYSE, but advancers led 16-15 on the Nasdaq. Upside volume was 44% on the NYSE, and 68% on the Nasdaq. New highs-new lows were 208-5 on the NYSE, and 200-4 on the Nasdaq.

After the close, Jabil beat estimates and reaffirmed guidance, and Micron rose on its results.

During the day, soared 35% on an acquisition.

Intersil gained 5% on a deal with 3Com .

EDS surged 7.5% on a new business plan.

Red Hat rose 2% after meeting estimates.

Nextel , AskJeeves and Yahoo hit new 52-week highs.

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