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TheStreet Open House

If Your Head's in the Cloud, Buy Oracle

NEW YORK ( TheStreet) -- Every time I want to give Wall Street just a little bit of credit, something happens that presents indisputable evidence of just how it continues to get things wrong.

It continues to amaze me to see how often investors are easily swayed. They are quick to not only buy whatever hype Wall Street is commissioned to sell, but they are always the first to cry foul when it blows up in their faces. Often, the reason is because they opted to sacrifice value for the endless promises of growth.

There is no company today that fits this criteria better than database giant Oracle (ORCL).

I say this because as enamored as investors have become with cloud computing companies, there is very little evidence to support the idea investors even understand exactly what it is they are excited about.

Amid all of the buzz surrounding "big data" and the likes of Salesforce.com (CRM), EMC (EMC) Riverbed (RVBD) and F5 (FFIV), what often gets lost is an understanding of exactly how this collection of data will be used. In essence there is a gross discount of what is known as "analytics," a service that is unmatched to Oracle.

Though the company continues to take this disrespect in stride, on Monday it demonstrated just how appreciative its customers have been of its services by reporting fiscal fourth-quarter earnings that topped Wall Street's expectations.

The company announced net income of $3.5 billion or 69 cents per share for the period ending in May. This compares favorable to what it produced last year when its earned $3.2 billion and 62 cents per share.

Oracle beat on both the top and the bottom lines. Customers were clearly pleased with its products and services as its registered revenue of $10.9 billion -- a 1% increase from the previous year. Earnings arrived at $4.1 billion, or 82 cents per share on a non-GAAP basis, topping analysts' estimates of $10.89 billion and 78 cents per share, according to FactSet Research.

As impressive as these numbers were, even more remarkable is its revenue from software licenses surged by almost 40% to $3.98 billion.

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