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2021-12-21
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Oracle Faces Potential Credit Rating Downgrade to Reflect Added Debt for Cerner Deal
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As noted earlier, the enterprise software giant as of the end of November had about $22.8 billion in cash and securities, offset by about $73.4 billion in long-term debt, leaving them with $50.6 billion in net debt. Any way you do the math, it is clear Oracle will need to finance at least a portion of the purchase price. So far, the company has declined to provide any details on how it plans to finance the deal.</p>\n<p>The credit-ratings firm Moody’s late Monday said it has placed its debt ratings on Oracle under review for possible downgrade “to reflect the likelihood of a meaningful deterioration in Oracle’s cash balances and financial leverage after the acquisition of Cerner.”</p>\n<p>Moody’s notes that Oracle should generate about $10 billion in annual free cash flow after paying dividends and including the impact of the Cerner deal. But Moody’s adds that “it could take 2 years or more for Oracle to fully offset the initially credit-negative impact of the Cerner acquisition.”</p>\n<p>Moody’s analyst Raj Joshi noted in a statement that the proposed acquisition “will strengthen Oracle’s position in the healthcare IT industry, a large industry vertical with strong long-term growth prospects.” Joshi added that Oracle is likely to generate “substantial revenue synergies from the combination over time.” But he adds that the deal “will meaningfully weaken Oracle’s financial profile initially and increase execution risk.”</p>\n<p>Citi analyst Tyler Radke said in an interview that the deal likely puts at least a temporary end to Oracle’s aggressive stock repurchase program—the company bought back $7 billion of stock in the November quarter alone, and has repurchased close half of its outstanding stock over the last decade.</p>\n<p>Radke expects Oracle will “extract a lot of costs” from Cerner, and he adds that the company is likely to shift the cloud-based versions of Cerner’s software to Oracle’s own cloud platform and away from Amazon Web Services. The analyst adds that he thinks the price Oracle is paying seems reasonable, but notes that there is “a lot of execution risk.”</p>\n<p>Oracle shares in Monday’s regular session fell 5.2%, to $91.64; the stock is 0.5% higher in after-hours trading.</p>","source":"lsy1601382232898","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Oracle Faces Potential Credit Rating Downgrade to Reflect Added Debt for Cerner Deal</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nOracle Faces Potential Credit Rating Downgrade to Reflect Added Debt for Cerner Deal\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-12-21 08:50 GMT+8 <a href=https://www.barrons.com/articles/oracle-faces-potential-credit-rating-downgrade-to-reflect-added-debt-for-cerner-deal-51640044798?mod=hp_LATEST><strong>Barrons</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Oracle could face a debt-rating downgrade tied to its announcement on Monday of an agreement to acquire the electronic health records company Cerner for $28.3 billion in cash.\nOracle(ticker: ORCL) has...</p>\n\n<a href=\"https://www.barrons.com/articles/oracle-faces-potential-credit-rating-downgrade-to-reflect-added-debt-for-cerner-deal-51640044798?mod=hp_LATEST\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"ORCL":"甲骨文"},"source_url":"https://www.barrons.com/articles/oracle-faces-potential-credit-rating-downgrade-to-reflect-added-debt-for-cerner-deal-51640044798?mod=hp_LATEST","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1156318373","content_text":"Oracle could face a debt-rating downgrade tied to its announcement on Monday of an agreement to acquire the electronic health records company Cerner for $28.3 billion in cash.\nOracle(ticker: ORCL) has agreed to buy Cerner (CERN) for $95 a share. As noted earlier, the enterprise software giant as of the end of November had about $22.8 billion in cash and securities, offset by about $73.4 billion in long-term debt, leaving them with $50.6 billion in net debt. Any way you do the math, it is clear Oracle will need to finance at least a portion of the purchase price. So far, the company has declined to provide any details on how it plans to finance the deal.\nThe credit-ratings firm Moody’s late Monday said it has placed its debt ratings on Oracle under review for possible downgrade “to reflect the likelihood of a meaningful deterioration in Oracle’s cash balances and financial leverage after the acquisition of Cerner.”\nMoody’s notes that Oracle should generate about $10 billion in annual free cash flow after paying dividends and including the impact of the Cerner deal. But Moody’s adds that “it could take 2 years or more for Oracle to fully offset the initially credit-negative impact of the Cerner acquisition.”\nMoody’s analyst Raj Joshi noted in a statement that the proposed acquisition “will strengthen Oracle’s position in the healthcare IT industry, a large industry vertical with strong long-term growth prospects.” Joshi added that Oracle is likely to generate “substantial revenue synergies from the combination over time.” But he adds that the deal “will meaningfully weaken Oracle’s financial profile initially and increase execution risk.”\nCiti analyst Tyler Radke said in an interview that the deal likely puts at least a temporary end to Oracle’s aggressive stock repurchase program—the company bought back $7 billion of stock in the November quarter alone, and has repurchased close half of its outstanding stock over the last decade.\nRadke expects Oracle will “extract a lot of costs” from Cerner, and he adds that the company is likely to shift the cloud-based versions of Cerner’s software to Oracle’s own cloud platform and away from Amazon Web Services. The analyst adds that he thinks the price Oracle is paying seems reasonable, but notes that there is “a lot of execution risk.”\nOracle shares in Monday’s regular session fell 5.2%, to $91.64; the stock is 0.5% higher in after-hours trading.","news_type":1},"isVote":1,"tweetType":1,"viewCount":972,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"CN","currentLanguage":"CN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ZH_CN"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/693537351"}
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