Is Oracle back? A $28B health care acquisition is a bullish sign

Oracle was late to the cloud. But it's showing signs of life, and a big health care acquisition (Cerner ) may shepherd a new chapter for the firm.

SPAIN - 2021/06/18: In this photo illustration an Oracle Corporation logo seen displayed on a smartphone with an Oracle Corporation logo in the background. (Photo Illustration by Thiago Prudencio/SOPA Images/LightRocket via Getty Images)

Oracle was founded in 1977 as a (yawn) database solutions vendor.

Today, it has a market cap of $244B but has fallen far behind 2 other tech firms also launched in the mid-1970s (i.e., Apple @ $2.8T, Microsoft @ $2.5T).

One big reason: It missed the cloud computing revolution, which Larry Ellison — founder, CTO, and chairman of Oracle — called a fashion trend and “complete gibberish” in 2008.

Turns out, Ellison was very wrong

Revenue for global cloud computing infrastructure is projected at ~$150B for 2021. And Oracle only has a sliver of the pie, per Statista:

  • Amazon Web Services: 32% global market share
  • Microsoft Azure: 20%
  • Google Cloud: 9%
  • Oracle: 2% (womp, womp, womp)

However, the company is moving in the right direction. Its latest quarterly earnings showed the cloud division grew +22% YoY (with an $11B+ run rate).

Can a big acquisition change its fortunes?

Oracle announced a $28B+ deal for electronic medical records firm Cerner. Per The Wall Street Journal, Ellison wants to buy his way into health care.

The plan makes sense: health care accounts for ~20% of US GDP, and software for medical records is a $29B+ industry that has mostly not migrated to the cloud.

Oracle calls Cerner the “anchor asset” of this ambition. (It’ll also be a blow to Amazon, which is currently Cerner’s largest cloud provider.)

The all-cash deal…

… will be Oracle’s biggest deal ever but still needs approval. Notably, UK’s antitrust regulators are reviewing Microsoft’s recent $16B acquisition of Nuance Communications, a speech recognition firm popular in health care.

Winning Cerner may put Oracle’s failed TikTok acquisition in the past (we still can’t believe this was a thing) and help it gain ground in the cloud race.

Ellison — the world’s 5th richest person ($120B+) — probably likes the sound of that fashion trend.

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