Recently Oracle’s Board authorized an additional $12 Billion to the Company’s share repurchase authorization. We are not fans of share repurchases and fully understand why institutional investors like them – they reduce share count, boost EPS and mitigate downside risk. We hosted a recent podcast on the subject:
Our view is that share repurchases imply that senior management can not think of a better way to deploy the Company’s capital. This should never be the case, particularly with technology companies where it is imperative to keep the product portfolio fresh via a consistent, operationalized product development effort augmented with a disciplined M&A program. Notwithstanding the recent Aconex acquisition, if the Ellison, Hurd, Catz triumvirate can’t figure out how to best deploy Oracle’s capital, perhaps it’s best to allow a capable leadership team to lead the effort. Oracle hasn’t exactly blazed an innovation trail as of late.
Healthcare is Broken “Shock!” you say. CEORater Podcast episode 90 discusses various catalysts for change. Healthcare market disruption in part will come from startups, new market entrants and various technologies that in the aggregate empower consumers and remove waste from the healthcare ecosystem (HBR estimates $1 Trillion in healthcare-related waste.) To maximize this opportunity requires removing politics…
Time for A CEO Change and Board Swap Out at IBM
Neither IBM’s CEO Ginni Rometty nor IBM’s Board understand the nuances of crafting a story for Wall Street nor executing a strategic M&A program to offset the negative impact to IBM’s revenue as a result of the strategic shift to recurring revenue products & services.
Autonomous Teaser, Uber Data Breach, More M&A
In this edition of the CEORater Podcast we cover:
1.) Autonomous driving teaser..
2.) Perhaps Microsoft (MSFT) ought to acquire Anaplan and other SaaS/cloud Financial Management tools to create an upgrade glide path for Excel? We think so. Infor would do well to follow a similar M&A path.
3.) Uber the latest company to suffer a publicized data breach. We sound like a broken record regarding the subject of Cybersecurity.
4.) Meg Whitman steps down at HPE. IT Services and Technology-Enabled Services companies would be wise to acquire Enterprise Software companies. Such acquisitions would be margin accretive, EPS accretive, would bolster valuations and perhaps most importantly would begin to move the Services vendors out of the commodity services space and into a sector where they would own IP.
Perhaps time for Microsoft to acquire Anaplan? (via WSJ): Stop Using Excel, Finance Chiefs Tell Staffs
Cultural fit between merger/acquisition partners is essential in order to maximize the probability of a successful transaction. We define successful M&A transactions as those where the parties who agree to merge/be acquired have engaged employee bases that are motivated to work and create new products and services together. To engage with customers together. This goes beyond ROIC calculations. We cite the example of Amazon’s acquisition of WholeFoods as one that will “work” in no small part because the two companies share a similar culture.