Oracle (ORCL): Gambling with shareholder money

Oracle has the cash to make the purchases but it takes on two very big risks. The first of these is considered integration. Buying large numbers of companies at about the same time puts tremendous pressure on Oracle top management to decide where to cut costs, what executives to keep, and which products are worth nurturing as each new enterprise comes into the firm's portfolio. The decisions would be rough if Oracle was only buying two or three companies. With ten being integrated in the same year, the chance that the big software company's top people make mistakes when deciding what to do with new employees and products is very high.

The other risk is that the recession may not just hurt Oracle's legacy businesses. It may do financial damage to the new firms it is buying. This could add pressure to Oracle's earnings as some of the new enterprises are hit harder in a downturn than the operations that Oracle has owned for several years.

If the M&A activity is successful, it may take an economic recovery to uncover the sales and earnings value of the strategy. And, that may take until the end of the decade.

Douglas A. McIntyre is an editor at 24/7 Wall St.