I really have to wonder if buying Cerner for $28B has a realistic payoff to get the kind of return needed to fund an M&A like this. As we know this is by far the biggest acquisition we have ever made -by factor of 3 or 4, it's not even close to Net Suite buy. Basically this is a colossal buy... a bet the farm type of deal. I mean is there really a market in e-data collection/storage in the medical field to make sense at these numbers? Technology changes now on a daily basis and will there be a market for this type of data collection in 2, 5 or 10 years from now to justify this burden? If the answer is no then we will probably see employee comp cuts to make up the difference.... $$64K question is: did we really need to make this investment and how does this really fit into our core ??
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Excellent observation. The business world is littered with bad acquisitions. Daimler and Chrysler come to my mind. Some do little damage, some never ever recover.
I guess LE finally figured out that the HW business is all but gone, so now he's all in on selling Medical Information technology (?? really ??).
We got 25 -30K employees in Cerner - I want to know who is going to resolve all of the duplication in roles and responsibility between the two companies and how soon good old Larry will be shipping all of our jobs to low cost centers to pay for this acquisition... As said above we are not at all in this Hospital data business and know nothing about it... so I guess we will soon find out who bought who !!
Acquisitions at this price are high risk...other companies who have "overpaid" for M&A like AOL and Time Warner or Kmart and Sears or Google and Motorola were complete failures an they paid a price for their mistakes....one or both is not around any longer. It's what happens when companies try to "buy" sales they are incapable of generating themselves. But as was said by OP above, does this really fit to our core and who in our company knows this medical storage marketplace??? ....time will tell the story as to how smart this was...but for LE all is good...
Compensation based upon sales was much easier to track. Revenues were tracked. That said, compensating based upon consumption, well let’s just say that’s another story.