Hell Freezes Over: Oracle Buying Shares in SAP?

The rumor du jour hit the Reuters wire early this morning, and it's a doozie: SAP's shares are up in recent trading because Oracle has bought some eight percent of the company. Considering April Fool's Day is come and gone, one has to assume that this was reported not for its humor value but for some other purpose -- maybe even as a piece of legitimate news.

So a little dissection is in order: First, any time an analyst says a stock's shares are up because of a single event is usually speculating, lying, or worse. Unless you really survey buyers, you'll never know why a stock has gone up or down, absent some highly material event like a major lawsuit, product failure, or buyout. What would be interesting, and perhaps more genuinely newsworthy, is to speculate on other, more plausible reasons why the stock was ramping up. Gosh, it may actually be about a product strategy, or some other genuine reason.

Second order of business is to understand what could never happen along the lines of Oracle buys SAP: European regulators would have a field day killing off such a deal, well before US regulators started to unravel it. There really would be no way for Oracle to beat the anti-trust look and feel of such a deal, and it would be dead in the water well before its launch.

Third order of business is to quell the notion that Larry could buy enough SAP stock to sit on the SAP board and screw things up: Guess what, that's not possible either. Board members cannot act in ways that are inimical to the financial health of a public company, and no amount of stock ownership in SAP would permit any board member to act against its interests.

So what do we have in the end? Just another rumor that, due to the subject -- Oracle v. SAP -- and the infamous combativeness of Larry Ellison, could almost be true if it weren't for that little issue of fact. Oh well. I got a lot of entertainment value out of the idea. Hope you did too.