Oracle's Secret Acquisition

Oracle Corporation will not be taking on any new acquisitions in the near future, allegedly.

After 80 acquisitions in 80 months, Larry Ellison and company are nurturing the growth of what they have planted and making shareholders happy.

In 2011, the theme is "organic growth" at Oracle, but is there more behind the talking points?

It may seem like economic liberalism is yielding to fiscal conservatism but there is another legitimate factor influencing Oracle's downshift on acquisitions --- exaggerated asking prices.

Oracle CEO Larry Ellison slowed the pace recently by saying, "We're able to grow through acquisitions when they're attractively priced and they make sense.  They are, by and large, not attractively priced now and don't make sense, so we're not doing them."

Oracle's fiscal 2011 fourth quarter sales rose 13 percent to nearly $11 billion, net income jumped 36 percent to more than $3 billion, and the company ended the quarter with nearly $30 billion virtually sitting on the table.

Obviously, Ellison's company can self-finance further acquisitions if it so chooses.  It would appear that it's simply choosing not to right now.

Is Oracle waiting-out an inflated market cycle while responsibly managing what it already owns?  Most say that's the case, but is that all?

A Casual Conversation

Here's what an Oracle executive told Californiality about Ellison's current aqcuisition policy, anonymously, in a chat earlier this week:

Is Ellison really slamming the brakes on acquisitions?

"Yeah, you can say that.  Tech stocks right now, for the most part, are overrated and overvalued, so what Larry says about that is true.  Our company has bitten off enough to chew on for a while, so we're not aggressively looking to take on anything more at the moment --- well, in theory.  If a 'deal of a lifetime' comes our way, sure, we'll look at it."

So, is there a 'deal of a lifetime' you guys are looking at now?

"Well, there are always companies that approach us, you know, because we know how to turn a profit.  We run a tight ship, so we can afford opportunities, and our people are good at spotting a sure thing.  You could say that our eyes are always open to whatever."

Gee, that was generic.  Look, I'm not Oprah, so relax.  Seriously, whatever your company is looking at must be really cool or else you wouldn't be looking.

"I didn't say we were looking at anything at all, Oprah." (laughs)

Didn't you just say "in theory"?  Your company isn't looking to take on more right now, IN THEORY?  I'm just sayin'.

"What I meant was, Mark, our ears are to the ground even though we aren't aggressively searching for anything at the moment."

So, what you guys are non-aggressively looking at --- is it a household name?  Would most people know the company?

(Takes a big drink and glares silently)

Seriously, man, I'm not trying to be jerk-wad.  It's not like that.  Okay then, let's put it this way.  Should I snatch-up some Oracle shares, like, ASAP?

"Everyone should always invest in our stock.  Do you want a refill?"

No, I'm good.  Just answer this and I'll drop it.  Will shareholders be happy?

"Without divulging anything, yes.  Shareholders will be very happy.  What --- are you gonna blog that?  I didn't really say anything worth blogging about."

I'm sure that a few of my discerning readers will find something interesting in there.

"Yeah, right.  In between Beach Boys songs and Miss California." (laughs)

You never know, dude.