Oracle pays $7.4 billion in cash for Sun Microsystems -- really?

Filed under: Deals, International Business Machines (IBM), Sun Microsystems (JAVA), Oracle Corp (ORCL)

Today's announcement that Oracle (NASDAQ: ORCL) would acquire Sun Microsystems (NASDAQ: JAVA) for $7.4 billion worth of cash left me scratching my head. The rationale? Something that Oracle's president calls non-GAAP earnings. Does this mean that Oracle's first acquisition of a hardware company makes strategic sense? I don't know.

I am not sure what non-GAAP earnings are, but it sounds like it is a special kind of accounting meant to justify a deal that would not look good on a GAAP basis. Safra Catz, Oracle's president, estimates that on a non-GAAP basis, the deal will add $1.5 billion in "non-GAAP operating profit" in the first year and $2 billion to that new measure in future years.

Continue reading Oracle pays $7.4 billion in cash for Sun Microsystems -- really?

Oracle pays $7.4 billion in cash for Sun Microsystems -- really? originally appeared on BloggingStocks on Mon, 20 Apr 2009 09:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments