Not Much Downside Left for ORCL

Updated from 1:43 p.m. EDT on March 26.

So, Oracle (ORCL - commentary - Cramer's Take) reported revenue below estimates but managed to make the bottom-line number of 30 cents per share.

The good news in a nutshell: Operating margins increased by 200 basis points from a year ago.

The bad news in a nutshell: The revenue miss was due to the company's weak application license revenue.

The company reported revenue of $5.37 billion vs. expectations of $5.42 billion, but, again, EPS of 30 cents were in line.

License revenue checked in at $1.6 billion vs. consensus of $1.69 billion.

Management stated that the company had trouble closing a few deals last quarter, given the uncertain economic backdrop, and as a result, there was some uncertainty going forward as well. The applications business was weak across all geographies in the last quarter, with elongated sales cycles and slower deal signings.

Database and middleware segments did well, as per management; this partially offset applications license weakness.

As far as the outlook goes, management guided pretty much in line but said that close rate assumptions built into fourth-quarter guidance are below historical rates.

Going forward, if Oracle is able to close the BEA Systems (BEAS - commentary - Cramer's Take) acquisition (pending E.U. approval) in the quarter, we could see some upside when the company reports numbers for the fourth quarter, as the BEA Systems deal is supposed to be accretive to earnings upon closure.

At current levels, Oracle is probably a stock worthy of investment. Not much downside left from current levels except for a market-related downside.

ORCL Preview: Outlook Could Be Conservative

Oracle (ORCL - commentary - Cramer's Take) is set to report earnings after the close of trading today.

The company is expected to earn 30 cents a share on revenue of $5.42 billion for the February quarter. For the May quarter, current Street consensus is for earnings of 44 cents a share on revenue of $6.74 billion. For fiscal 2009 (ending May 2009), the sellsiders are expecting earnings of $1.45 a share on revenue of $24.64 billion, for year-over-year growth of 14% and 11.4%, respectively.

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At the time of publication, Somaney had no positions in the stocks mentioned, although positions may change at any time without notice.

Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com, a subscription site that focuses on technology and Indian stocks (including ADRs), providing information, news and chatter. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.