Oracle Earnings Preview; June 26, 2007 (ORCL, CRM, MSFT, SAP)

Oracle Corp. (ORCL-NASDAQ) is set to report earnings right after the close of trading today.  The enterprise software behemoth is expected to post EPS at $0.35 on a non-GAAP basis on consolidated revenues of $5.615 Billion.  The company gave guidance of an interpreted $0.34 EPS and $5.4 Billion to $5.6 Billion revenues a quarter ago.  This earnings report will also mark the end of the company’s fiscal year, so we may get to hear some forward earnings or top-line growth projections.   

The projections for fiscal May-2008 are in the vicinity of $1.14 EPS (up from the $0.99 estimate for 2007) and revenues are expected to be $20 Billion (11% higher than $17.925 Billion estimate for 2007).  Keep in mind that the further out on the calendar you go, the wider the range of estimates.

Shares are down slightly today after gapping up at the open.  The current $19.40 price is down 0.4%, and that is at the higher-end of the $13.77 to $19.96.  Oracle currently sites a hair under the $100 Billion market cap level.  It has already acquired most of the larger competitors, leaving Salesforce.com (CRM-NYSE) as the ‘lower priced alternative’ and SAP AG (SAP-NYSE/ADR) and Microsoft (MSFT-NASDAQ) as arch rivals.  The company is pressing more and more for Linux offerings, and that is just one of the areas it is targeting.

The chart looks like there will need to be significant upside to propel the shares to new highs, although it is also at the lower-end of its most recent trading band.  Options traders do not appear to be looking for more than a $0.40 to $0.50 move today.  Shares closed at $17.14 at the end of 2006 and briefly touched under $16.00 on March 1.  Of the analysts that follow the stock, the average longer-term ‘buy target’ looks to be right at $22.00. 

Jon C. Ogg
June 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.