Oracle Preview: What's the Post-Sun Plan?

Just a couple of months after its shock acquisition of Sun Microsystems(JAVA Quote), Oracle(ORCL Quote) investors will be looking for an insight into the database giant's long-term strategy when it reports its fourth-quarter results Tuesday.

"We continue to rate Oracle a 'buy' and believe the stock can continue to work given potential underlying positive EPS revisions, accretion from the Sun Microsystems deal, and product launches in fiscal year 2010," wrote Ross MacMillan, an analyst at Jefferies & Company, in a note released Monday.

Oracle sent shockwaves through the tech sector when it snapped up struggling Sun for $7.4 billion.

Brimming with servers and storage, Sun seemed a strange target for the software giant. By adding its database software to Sun's Java, Solaris, and MySQL technology, however, Oracle could pose a serious threat to both SAP(SAP Quote) and IBM(IBM Quote), completely altering the tech landscape.

Sun's massive installed base (subscription required) could also provide a launchpad for the database specialist's software.

Oracle, which competes with IBM's DB2 offering, is expected to wrap up the deal next month when Sun shareholders vote on the planned buyout.

The software firm will then face the challenge of integrating Sun, which has earned a reputation for under-performing in recent years.

Jefferies & Company analyst MacMillan nonetheless estimates that the Sun deal could be worth 15 cents to Oracle's earnings per share in the first 12 months post-acquisition, and also expects diminishing headwinds from foreign exchange.

"[With] the potential for product releases on middleware, database and applications to help underlying license growth in fiscal year 2010, we continue to recommend Oracle," he added, raising his price target to $24 from $22.