Here’s Why Oracle Loves Cisco and NetApp

Is Oracle (NASDAQ:ORCL) admitting weakness or being smart by joining Cisco (NASDAQ:CSCO) and NetApp (NASDAQ:NTAP) in the new FlexPods? Arguments can be made for both cases, but it’s clear that Oracle will benefit in its all-inclusive approach to selling reference architectures to an even wider audience.

FlexPods store a great deal of applications, using Cisco servers and NetApp storage platforms. Oracle noted in a Wednesday blog post that  it will start with its JD Edwards version and will follow with a NetApp clustered device (plus a Linux version) in June. A FlexPod featuring Oracle VM will appear later in the year, rounding out the new line.

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While it might be tempting to point to fear of competition as the reason for Oracle’s moves, a better explanation is seeing room to expand by teaming with NetApp and Cisco. Growth in the virtualization department is a clear goal of Oracle’s, and it can reduce the cost of some licenses to appeal to NetApp’s customers. As it stands, NetApp is doing well enough on its own, as its private cloud storage solutions filled several companies’ needs when released in March.

HeartsNetApp has posted net income growth, increases in cash flow and improvements in earnings per share in recent reports. News of the partnering with Oracle pushed NetApp stock nearly 6 percent Friday, posting a $1.99 gain to close at $35.46. It is being given a buy rating by many analysts. Oracle, for its part, has shown consistent growth over the last four years and remains poised for more success as the cloud computing industry grows.

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Cisco, following a sluggish period, may have righted its ship. The acquisitions of Cariden, Meraki and Cloupia caused the stock to rise steadily, making investors curious if more big-name purchases are around the corner. While rumors have swirled about Cisco’s interest in Alcatel-Lucent (NYSE:ALU), nothing has materialized.

Oracle’s purchase of Acme Packet (NASDAQ:APKT) provoked even more speculation of a response by Cisco. News of the partnering of the three companies in the new FlexPods may calm speculation for the time being.

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