Oracle Sees Growing Software Demand

An increasing Internet user base has led to greater demand for data maintenance, while rapid adoption of internet video sites like YouTube has driven growth in data storage requirements.

These factors are helping to drive demand for database software and middleware licenses, thereby benefiting Oracle(ORCL) and other players like SAP(SAP), Microsoft(MSFT), IBM(IBM), and HP(HPQ).

We estimate Database Software Licenses and Middleware Software Licenses constitute around 40% and 26%, respectively, of Oracle's stock. Oracle's database, application, and middleware software are used by companies for efficiently collecting, processing, and storing important customer and business information.

We currently have a Trefis price estimate of $35 for Oracle's stock, about 52% above the current market price of $23.

We estimate that the global database software licenses market has increased from $5.4 billion in 2005 to $6.6 billion in 2009.

The average of Trefis member forecasts for global database software licenses market indicate an increase from $6.8 billion in 2010 to $8.3 billion by 2016, compared to the baseline Trefis estimate of an increase from around $7 billion in 2010 to $8.6 billion by the end of the Trefis forecast period. The member estimates imply a downside of 1% to the Trefis price estimate for Oracle's stock.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Oracle's stock to global database software licenses market.

In the past, global middleware software licenses market has decreased from $14.8 billion in 2005 to $10.8 billion in 2009.

The average of Trefis member forecasts for global middleware software licenses market indicate an increase from $11.3 billion in 2010 to around $14 billion by 2016, roughly in line with the baseline Trefis estimate of an increase from $11.4 billion in 2010 to about $14 billion by the end of the Trefis forecast period. The member estimates imply a small downside to the Trefis price estimate for Oracle's stock.

Our complete analysis for Oracle's stock is here .

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Trefis members constitute more than tens of thousands of users of the Trefis platform, inclusive of investors, financial analysts, and business professionals who use the Trefis platform to create their own models and price estimates.

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