Oracle's future is uncertain after Cerner deal closes, analyst says

Oracle's future is unclear after the company completes its $28 billion acquisition of Cerner, according to a March 11 Seeking Alpha report.

Keith Weiss, an analyst at Morgan Stanley, expressed concern about aspects of the deal, including that it caused Oracle to delay share repurchases. Another concern was that Oracle's guidance on the deal doesn't include any contributions from Cerner, such as how the deal might help strengthen Oracle's business after the deal closes.

"With share repurchases slowing, [Oracle] will have to sustain topline growth and operational discipline to drive forward [earnings per share] growth," Mr. Weiss wrote in a note to clients, adding that the scenario is "a change from recent [company] history."

Oracle management views its healthcare operations as highly strategic and is focused on bringing Cerner's industry relationships together with Oracle's "industry-specific features to deliver an integrated offering," according to Mr. Weiss.

Oracle and Cerner jointly announced the deal in December. Under the deal, Cerner will become a dedicated industry business unit within Oracle, the companies said. Oracle will also make its hands-free voice assistant the primary interface to Cerner's clinical systems, allowing clinicians to make commands in the EHR via voice instead of typing on the computer keyboard. 

The companies also said that by leveraging Oracle's large supply technological resources, Cerner will have the potential to accelerate its product and technology development lines, possibly allowing for care that is more efficient and connected.

This deal with Cerner is Oracle's largest yet. Oracle, with a market value of more than $280 billion, currently provides cloud infrastructure and applications in industries including financial services, telecommunications, utilities, pharmaceuticals, hospitality, retail, food and beverage, construction and engineering, manufacturing, and government.

The deal is slated to close as soon as the end of Oracle's current fiscal fourth quarter.

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