What happens when the industry leader who never misses earnings manages a huge disappointment?  This is the question regarding Oracle Corporation (NASDAQ: ORCL).  The company has a near-decade of history being very positive with earnings and showing increased market share with solid guidance.  That was not the case, and the spillover is working its downstream to other technology and IT peers and competitors.

Cisco Systems, Inc. (NASDAQ: CSCO) is a company which often mirrors Oracle’s business trends when times are normalized.  While the companies have historically competed for different spending dollars from corporations and governments, a spending slowdown in the network is often the same on the customer relationship management side.  Cisco shares are down only 2% at $18.03.

Speaking of identical issues, if Oracle is slowing then “The Baby Oracle” of Salesforce.com (NYSE: CRM) has to be facing many of the same issues.  Its shares are down 8% at $95.75 so far today.

If things are bad at Oracle, SAP AG (NYSE: SAP) is likely having a very hard time as well in the enterprise and CRM markets.  Its ADRs are the proof as they are down 5.4% at $52.70.

International Business Machines Corporation (NYSE: IBM) is down 3.6% at $180.50 and shares are now down more than $10 from when the Warren Buffett investment news hit.  The company has a new CEO starting as well and it is hard to imagine that its IT operations on the enterprise and government side are not that different from how Oracle described its quarter and guidance. 

What about enterprise storage, and what about enterprise virtualization?  EMC Corporation (NYSE: EMC) and VMware, Inc. (NYSE: VMW) are the perfect examples as much of the same spending dollars overlap here.  EMC shares are down 4% at $21.55 and VMware shares are down 8% at $78.00. 

Ditto for Red Hat, Inc. (NYSE: RHT) with shares down 5.6% more at $39.65, although Red Hat shares had already been spanked yesterday after disappointing earnings as the stock went from about $46 to $42 on the news.

And what about Symantec Corporation (NASDAQ: SYMC) for security and storage solutions?  After another failed attempt at a share price breakout it shares are already back down at the bottom of a long-term trading range.  Symantec shares are trading down 3.1% at $15.15 and hit a new 52-week low.

Intel Corporation (NASDAQ: INTC) and others had all indicated a slower spending climate but Oracle is not likely able to use the “Thailand flooding” example.  Intel is lower by less than 1% at $23.64.  Another surprise “only down a tad” is Microsoft Corporation (NASDAQ: MSFT) with shares down only 0.55% at $25.88 on the day.  If things are slow on the consumer PC business and if enterprise spending and international currency woes are facing Oracle it would seem logical that Microsoft’s O/S sales are at risk too.

The iShares S&P North Amer Tech-Software (NYSE: IGV) are not super-active in trading volume but the ETF shares are down 4.5% at $53.33 on the day.

This is only a snapshot of the downstream fallout.  The real situation is much broader and now the hope has to reside that Oracle’s earnings debacle was a fluke.  Or maybe it is the curse of Sun Microsystems hanging over the company.

JON C. OGG

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