Rare Oracle deal would be anything but spontaneous
Summary
NEW YORK, Dec 17 (Reuters Breakingviews) - Oracle (ORCL.N) has spent the past few years buying back an extraordinary amount of its own stock. That makes the possibility that it might acquire hospital-records software specialist Cerner (CERN.O) for $30 billion, per the Wall Street Journal on Thursday, look like a sudden change of direction. Assume Oracle were to leave research and development spending intact but slash Cerners $3 billion of other operating costs in half. Taxed at the statutory rate, that $2.9 billion of operating profit would equate to a pretty decent 7% to 8% return on invested capital. Enterprise software firm Oracle had a market capitalization of $275 billion based on closing prices on Dec. 16, before the article was published.
