Oracle Under Wide-Angle Lens

Oracle expects to grow its bottom line by 20% each year for the next five years. The company is on track to meet that target via a combination of organic growth of roughly 15% and acquisition-driven growth of 5%, says Phillips, adding that the goal is essentially an average, which may vary from time to time.

However, the company hasn't publicly discussed a target for organic revenue growth, he said. Oracle executives say that the Siebel acquisition will add 2 cents to 3 cents a share, excluding costs, to the company's bottom line in fiscal 2007.

Since the PeopleSoft deal closed in late December 2004, Oracle would soon be facing a tough comparison, but as Stimson and others analysts point out, the acquisition of Siebel will postpone that day of reckoning for at least a year. "Lacking any significant organic growth, we believe the company will need to rely more on further acquisitions to sustain its level of growth," he said in a note to clients.

That being said, sentiment on Wall Street appears to favor a solid quarter, despite any misgivings about the acquisition.

"An upside for the quarter is possible, though I'm not predicting it. I'd be disappointed if Oracle doesn't do better than in-line," said Loomis & Sayles analyst Tony Ursillo, whose company has a position in the stock. And that means exceeding the First Call consensus of a 14-cents-a-share profit on revenue of $2.94 billion. Wall Street's informal estimates for database and application license revenue are $531 million and $153 million, respectively.

Alan Lowenstein, senior vice president of American Fund Advisers, says he'd be satisfied with meeting estimates, though guidance for the November quarter and the rest of the fiscal year is, of course, key. Lowenstein, whose company holds a position in Oracle, is generally positive on the stock, saying that "at [a share price of ] $13 or $13.50, most of the negatives are priced in."