Downgrading Sovereigns, But S&P Actually Favorable on Oracle (ORCL)

Oracle Corporation (NASDAQ: ORCL) is getting a very positive treatment from a credit ratings agency.  Standard & Poor’s might be downgrading sovereign nations, but it is increasing its outlook for Larry Ellison and friends.

S&P is placing its ‘A’ corporate credit rating, the ‘A’ senior unsecured ratings, and ‘A-1’ short-term rating on CreditWatch with positive implications.  This may not be a formal upgrade, but it seems likely that one is heading that way. “Oracle has the business profile and financial capacity to finance ongoing acquisitions and share repurchases while maintaining an appropriate capital structure at the ‘A+’ rating level.”  The outlook reflects the company’s “exceptional liquidity and robust  free cash flow generation.” 

Oracle has recovered much of its weakness from its last earnings report in Christmas delivered nothing but a bag full of coal and switches to investors right before Christmas.  Shares fell from above $29 to under $26 but the stock has managed to crawl back above $28.50 now. 

The gain has logic that is simple enough: during December it looked as though enterprise spending was coming to a drastic halt on software and on hardware.  That seems to have worked itself through as a soft-spot since many companies have now guided “less poorly” than what was being telegraphed just over a month ago.