Oracle (ORCL): Some Earnings Are Better Than Others

Oracle’s (ORCL) earnings were excellent by any measure except, perhaps, the perverse yard-stick of Wall St. Revenue rose 21% and profits were up 30% To say in another way, margins improved sharply, one of the best measurements of a tech company’s success.

Beyond those current results, Oracle said that in the next quarter earnings would grow as much as 23% and revenue by as much as 19% The huge enterprise software company is one of the few really large firms in the recent history of business which has been able to integrate large acquisitions and make them work. Its only rival in this regard is Cisco (CSCO) Oracle will add even more heft when it completes its buy-out of BEA Systems later this year

A look at Oracle’s balance sheet is especially encouraging. The company has cash and short-term securities of $10.5 billion. That is up from $7 billion at the start of the company’s fiscal on May 31 of last year. Long-term notes payable are $6.2 billion. Shareholder equity is up to $20.8 billion from $16.9 billion at the start of the fiscal period.

Oracle’s shares were pushed down 8% on the news, which would put them near their 52-week low of just below $18. The stock has a 52-week high of $23.31. With the sell-off, Oracle’s stock will be off almost 15% this year. That contrasts to shares of its smaller rival SAP (SAP) which are up slightly over the period and IBM (IBM) which has a 10% gain since January 2.

In short, there is no sense to it beyond the fact that nothing is good enough in a bear market. It would not be hard to argue that Oracle’s numbers have been so good and so consistent that it is the strongest software company in the world.

That and $2 will get you a ride on the subway.

Douglas A. McIntyre