ORCL Preview: Estimates Are at Risk

For Oracle, and all software companies, the benefit is in having gargantuan margins, so profitability is not threatened so much as sales slow. Oracle is still integrating BEA, and will be able to push through "synergy" cost cuts. The company will probably announce some layoffs and other restructurings among its workforce of 85,000; with operating margins of 46%, however, it is hard to justify the human cruelty of mass layoffs so that Larry Ellison can make an extra billion or two each year. So don't look for any draconian actions just yet.

Of course, look at it this way, you are only paying 11x P/E for a leading software company. Who'd have ever thought you'd see that kind of multiple on this kind of stock?

The call starts at 5:00 p.m. EST.

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Know What You Own: Oracle operates in the application software, and some of the other stocks in its field include Microsoft (MSFT - commentary - Cramer's Take), Adobe Systems (ADBE - commentary - Cramer's Take), CA Incorporated (CA - commentary - Cramer's Take) and Intuit (INTU - commentary - Cramer's Take). For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.

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At the time of publication, Dvorchak had no positions n the stocks mentioned, although positions can change at any time.

Gary Dvorchak is a managing partner of Aviance Capital Management, a Sarasota, Fla.-based institutional asset manager that manages $200 million in growth and value equities and fixed income. Dvorchak holds a master's degree in business administration from Northwestern University and a bachelor's degree in computer science from the University of Iowa.